As volatility continues, the Nigerian naira is expected to depreciate to a fair value of N1,804.45 in 225.
The forecast is based on a new report by Afrinvest, a Lagos-based investment firm.
The company disclosed that while gross FX reserves have increased above $40 billion, it expects FX rate volatility to continue at a moderate pace.
According to the firm, its report is based on the belief that the Central Bank of Nigeria (CBN) will be constrained from meeting market demand sustainably, as inflows from inorganic sources caused the recent forex growth.
Afrinvestâs forecast comes amid Nigeriaâs 2025 budget, which put the exchange rate at N1,400 per dollar.
Meanwhile, on Friday, December 27, 2024, the naira appreciated against the US dollar after the Christmas holidays.
The Nigerian currency strengthened from N1,548.40 per dollar on December 24, 2024, to N1,534 on Friday, December 27, 2024.
Data from the FMDQ Exchange shows that the naira almost crashed to N2,000 per dollar in 2024, depreciating to its lowest at N1,700 per dollar in the parallel market.Â
This development came from the Nigerian government’s reforms, which floated the naira and devalued it twice. The moves have seen the naira lose over 40% of its value.
Afrivest analysts, however, said that the naira may rise if there are more inflows and liquidity, especially from crude export and diaspora remittances.
A previous report by TimesNow.com.ng disclosed that analysts believe the naira may see better days in the coming year due to reduced petroleum products and food imports.
A BusinessDay report quoted Uche Uwaleke, the director of the Institute of Capital Market Studies at Nasarawa State University, saying that the outlook is due to lower petrol and food imports and increased fuel exports, which would be an FX earner for the country.
He pointed to the reduced import of petroleum products as a significant catalyst for nairaâs rebound.
He further stressed the possible impact of increased earnings from the export of petroleum products.
Uwaleke noted the role of foreign portfolio investments and diaspora remittances, which would support the naira.
TimesNow.com.ng earlier reported that the naira rose against the dollar on Monday, December 23, 2024, gaining 0.14% in the Electronic Foreign Exchange Market System (EFEMS).
The naira appreciated N1,539.55 per dollar, an improvement from the previous day’s value.
Data shows that the CBN’s positive intervention helped the naira rise in value against the US greenback.
Source: TimesNow.com.ng
