Even though many assessments indicate that the naira is significantly undervalued, the US dollar has continued to gain strength due to the local currency’s steady rebound.
As long as the Central Bank of Nigeria keeps flooding the foreign exchange markets with subsidized US dollars, the outlook for the local currency is still favorable.
The apex bank recently sold $100,000 to 1508 Bureau de Change for N1101 per US dollar. This is anticipated to affect the direction of exchange rates in the market for alternative currencies.
The naira began new upward trends at the official window on Monday, moving from N1251.05 to N1245 during the intraday trading sessions.
FX speculation has reduced drastically following improved forex inflows into official and parallel markets. The Nigerian autonomous forex market recorded a 42% growth in FX inflows in March, according to data from FMDQ Securities Exchange.
Already, exchange rate has inched very closely to Goldman Sachs Naira bulls’ exchange rate of N1200.
The investment firm had expected the recovery to be within 12 months but fast and furious FX sales and cap on spread has shortened the time horizon for the fair value results.
Some Broadstreet analysts told MarketForces Africa that exchange rate may likely appreciated strongly in April as government plans foreign currency bonds sales in Q2. Banks Face Risks over 24hrs FX Positions Sell Down
“It is a wrong time to speculate in Nigeria’s forex market as Yemi Cardoso seems to have a strong resolve to drive naira repricing across FX markets”, LSintelligence Associates Research team said in a statement.
