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Naira Will Continue To Fall
Experts of Financial Derivative Company Limited predict that the naira will continue to fall to N200 per dollar at the parallel market.
Such appreciation was caused by the huge dollar sales by the Central Bank of Nigeria (CBN) at the bi-weekly RDAS sessions held on Monday (sold $629.39 million). However at the parallel market, the naira however depreciated by N1 against the dollar, as the paralel market rate rose to N191 per dollar from N190.
The analysts say that the parallel market rate is expected to cross N200 per dollar as dollar demand pressure persistsâ.
In the December edition of the Companyâs monthly economic bulletin they explains: âA N200 per dollar rate is only a 15 percent adjustment as against 45 percent devaluation in 2009. Although, projecting the value of naira is currently clouded by several domestic and exogenous factors, the fair value of the currency is expected to be between N180 per dollar and N195 per dollar at the interbank market.The naira adjustment by the CBN is timely and the depreciation of the naira has reduced over time because the official rate is closer to equilibrium. A further depreciation of 3-5 percent is also expected at the official market. This is due to anticipated impact of the global oil market spiral on external and fiscal buffers which limits the central bankâs ability to support naira. In addition, if the US changes its monetary policy stance, there might be a reversal of capital flows and an erosion of some of the external reserves. It should be noted that on July 18, 2014, Goldman Sachs forecast that the naira will trade at N165/$ in 3 months, N175/$ in 6 months and N195/$ in 12 months.â
In a review of the foreign exchange market, analysts noted that the Naira depreciated across all segments of the forex markets in November and December.
The CBN will continue to defend the naira within the range of N180 per dollar and 185 per dollar at the interbank market.
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