Economic and financial experts have said the naira may reverse this week the loss it recorded against the United States dollar last week.
Owing to increased scarcity of the dollar, the naira fell from 490/dollar to 497/dollar during the past week.
Currency and financial experts, however, linked the loss recorded by the local unit to acute shortage of foreign exchange occasioned by the absence of the Central Bank of Nigeria in the forex markets in the past three weeks.
The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “The CBN is still the major supplier of forex. The central bank has stopped selling forex at the interbank forex market and the Bureau De Change segment in the last three weeks.
“When the CBN resumes forex sales to the BDCs and begins interventions at the interbank market this week, the naira will reverse the loss it recorded last week.”
A senior associate in investment banking at Afrinvest, a local research and investment firm, Mr. Ayodeji Ebo, also said the naira should appreciate this week but noted that this might not be sustainable throughout the first quarter of this year.
He said there was a need to address the underlying factors fuelling the volatility in the naira-dollar exchange rate.
Ebo said, “The CBN needs to embrace the full implementation of the FX policy published in June 2016. A proper implementation will engender confidence, improve inflows which will invariably reduce the gap between the FX’s interbank and parallel market rates.
“We expect the pressure in the interbank market to persist as long as the spread remains wide. Consequently, this has continued to incentivise a lot of unethical unpractices. Inflows from Nigerians in Diaspora should improve liquidity in the interbank FX market if the spread with the parallel market is curtailed.”
Economic and currency experts have expressed divergent views over the outlook of the naira this year.
While some said the naira would experience further decline at the parallel market this year, others said the volatility noticed in the exchange rate last year could not continue this year.
“We will continue to see reasonable volatility of the naira during the first half of this year,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
According to Ezun, the naira will continue to depreciate at the parallel market while the Central Bank of Nigeria will keep managing the official rate around 305/dollar.