Market News
Currency Traders Predict Naira Fall to N1,560 Per Dollar Next Weeka - BUSINESS POST
By Adedapo Adesanya
Currency traders expect the value of the Naira to weaken against the US Dollar to as much as N1,560 per Dollar at the official foreign exchange market next week.
According to Reuters, the domestic currency is also expected to remain range-bound, with the Central Bank of Nigeria (CBN) and exchange bureaus selling Dollars to meet demand from importers and travellers.
Business Post reports that the Naira this month has traded from the N1,532/$1 to N1,535/$1 range, underpinned by robust FX liquidity and an efficient FX market.
However, noticeable pressure has seen the domestic currency fall consecutively this week. It closed at N1,536.18 per Dollar on Wednesday, August 20.
“With inflation easing, speculative trading has been limited, causing the Naira to trade in a tight range around 1,530,” one trader told Reuters, “The Naira is likely to stay in a narrow band between 1,520 and 1,560 next week.”
This is in line with forecasts from many Nigeria-based analysts, with Cordros Capital Limited in a recent note saying, “We expect sustained inflows from foreign portfolio investors (FPIs) due to existing carry trade opportunities and stronger market confidence.”
Also, improving non-oil exports, as well as limited incentives for Naira hoarding and speculation, are expected to reinforce steady inflows from domestic sources.
Updated data showed that the gross balance in the nation’s external reserves climbed to $40.962 billion this week.
Inflation also eased for the fourth consecutive month as the National Bureau of Statistics (NBS) reported that headline inflation eased by 34 basis points to 21.88 per cent year-on-year in July from 22.22 per cent year on year. On a month-on-month basis, consumer prices increased to 1.99 per cent versus 1.68 per cent on record in June. Food inflation increased by 77 basis points to 22.74 per cent in July from 21.97 per cent.
This strengthens the position of stakeholders seeking a cut in the country’s interest rate, which has been held steady for the last two cycles at 27.50 per cent.
