The naira dropped to a record low on July 29 following the suspension of sale of forex to Bureau de Change (BDC) operators in the country by the Central Bank of Nigeria (CBN).
However, a financial expert, Mr Bismarck Rewane, the Managing Director of Financial Derivatives Company Limited, has said by August/September the naira will appreciate in the parallel market towards 490-495 against the dollar.
He made this disclosure in his presentation at this month’s edition of the LBS Breakfast Session, noting that last month, the International Monetary Fund approved $650bn of special drawing rights for member countries, adding that Nigeria would receive $3.35bn to support external reserves build up.
“Gross external reserves will get a bump from the SDR facility. Naira will appreciate in the parallel market towards N490-495/$,” he said while highlighting the outlook for August/September.
According to him, Nigeria’s external reserves accretion would continue on improved dollar cash flow.
As of August 6, Nigeria’s external reserve had risen from $33.40bn at the end of July to $33.56bn, according to CBN data.
Rewane said, provided supply increases and crawling peg is adopted, the naira is expected to move towards a fair value of 470/$ to 490/$ at the parallel market.
“The CBN will increase forex supply especially to airlines and invisibles. Interbank interest rates will climb back up to 15-20 per cent range. AS CRR, other debits squeeze liquidity in the system, investors will remain tentative until signs of policy stability become manifest,” he said.
Also analysts at FDC said, “we continue to hold the view that the naira will continue to appreciate towards fair value (N470-N490/$) in the parallel market as long as the CBN increases forex supply. However, corporates remain nervous as to policy direction and uncertainty remains.”