Naira may weaken to N435 per dollar by end of the year, 5.83 percent lower than the current rate of N411/$ at the Investors and Exporters (I&E) forex window.
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Analysts at the FBNQuest made the projection in a note seen by BusinessDay. Naira gained marginally by 0.04 percent to N411.50k on Monday compared to N411.67k quoted on Friday on the I&E window, data from the FMDQ indicated.
Currency traders who participated in the trading on Monday maintained bids at between N395.00k and N425.90k/$, according to the data.
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The daily foreign exchange market turnover declined by 45.17 percent to $111.53k on Monday from $203.42k recorded on Friday.
The exchange rate remained flat at N482 at the Bureau De Change (BDC) segment of the foreign exchange market and N484 at the parallel market.
The Central Bank of Nigeria (CBN) has removed the official exchange rate of N379 per dollar from its website. But the CBN’s official rate still remains at N379 per dollar as of May 10, 2021, on the homepage of the FMDQ website.
This according to the analysts may suggest that the unification of rates reportedly pledged to the IMF ahead of the disbursement under the rapid financing instrument in April 2020 has materialised. This unification will strengthen the naira and improve investors confidence.
The federal finance minister was quoted in March as saying that distributions from the Federation Account Allocation Committee. (The same cannot be said for the exchange-rate assumption consultations.
Since the rate of NGN379 applied to relatively few transactions, the weightier issue is the rate at which the CBN makes regular sales of FX to set groups of end-users such as the BDC and that at the I&E window.
“As we have often said, we do not see any dramatic change in the exchange-rate regime, which the CBN terms a managed float. It has long-held doubts about a more market-determined system. There are several routes to an easing of the current pressure and to an accumulation of reserves, including a boost to oil earnings (ongoing), Eurobond issuance, new multilateral loans and the proposed allocation of Special Drawing Rights (SDR) to all IMF members. We think that the CBN may have identified one or more of these routes as its release,” the analysts said.
