Naira makes gain against US dollar, as Bank of America predicts N520/$1 exchange rate

Naira clinched a meager gain against the U.S dollar at the official market on Tuesday but remains above N440.

Data published on FMDQ website, where forex is officially traded, showed that the currency opened trading at N440.00 but closed at N441.25 to a dollar.

Yesterday makes it a week Naira started trading at over N440 the lowest level it has ever exchanged at the official market.

However, the forex supply to investors and exporters increased slightly to $74.33 million, up from $46.21 million reported on Monday.

At the parallel market exchange rates, according to @naira_rates, a Twitter account that tracks the black market shows that 1 USD exchanged at N731.460.

READ ALSO:Naira falls in value to all foreign currencies as dollar supply drops

Meanwhile, the Bank of America has predicted a 20 per cent devaluation of the naira post-2023 general elections.

The global lender said the local currency unit will weaken further next year as its exchange rate to the dollar is well above fair value.

The Economist, Bank of America Sub-Saharan Africa, Tatonga Rusike, listed three indicators that would crumble the naira.

First is the widely-used black-market rate, the central bank’s real effective exchange rate, and “our own currency fair value analysis”, indicating that the naira is 20 per cent overvalued.

“We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD,” Rusike said in a note to clients.

“While the naira will come under increasing pressure due to limited government external borrowing, devaluation is unlikely to happen until after the February 2023 presidential elections.,” BOE said.

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