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FG Set to Boost Naira to Dollar Exchange Rate ,Target New Dollar to Naira Rate By December 

Enudi Golden by Enudi Golden
January 11, 2024
in business, Headline, News
Reading Time: 2 mins read
Black Market Dollar To Naira Today 29tth December 2023
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FG Set to Boost Naira to Dollar Exchange Rate ,Target New Dollar to Naira Rate By December.

Federal Government of Nigeria has set an exchange rate target for naira before the end of 2023. Several reforms have been introduced, and it is expected that the dollar supply will ease the pressure. Naira continues to exchange at the lowest level in history at both the official and unofficial markets.

Naira to Dollar Exchange Rate Forecast: JPMorgan Predicts Naira at N850 by Year-End

JPMorgan Chase & Co, a prominent American financial services firm, has made a prediction about the future of the naira to dollar exchange rate. This comes on the heels of recent announcements by the federal government regarding expectations of an exchange rate between N650 and N750 to a dollar by December. The naira has been facing challenges, but several policies are set to be implemented as the Central Bank of Nigeria (CBN) anticipates an inflow of $10 billion. In this article, we will delve into JPMorgan’s predictions and the factors influencing the naira’s value.

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JPMorgan’s Prediction: Naira to Dollar at N850 by Year-End

JPMorgan has forecasted that the naira will close the year at N850 in the foreign exchange market. The financial company released this prediction in a note titled “Nigeria local markets strategy: Getting set for re-opening,” dated November 1.

The Outlook for Exchange Rate Flexibility:

JPMorgan also expects the Nigerian government to be open to greater exchange rate flexibility. The note suggests that the Central Bank of Nigeria (CBN) is willing to allow a more flexible exchange rate without relying on moral suasion to limit upward movements. The CBN had previously attempted to recalibrate the foreign exchange market in this manner, but these efforts were hampered by concerns about inflation.

The note states:

“The interbank FX rate has risen in recent days to over N900, from N750, thereby significantly closing the gap to the parallel rate, which is now just above N1,000.”

Challenges in Unifying the Exchange Rate:

JPMorgan acknowledges that a major challenge in the CBN’s plan to unify the exchange rate is limited foreign exchange (FX) liquidity in the official market. Furthermore, the naira is not fully convertible, adding to the complexity of the situation.

The financial institution also highlights the backlog of forex as a significant issue. They state:

“More Nigerians will patronize the parallel market due to a lack of liquidity. In our opinion, when authorities refer to the FX backlog, they are referring to US $6.8 billion in FX forward commitments that the central bank has not honored – the majority of which has been covered by commercial banks. “However, we estimate up to a further $3-4 billion (probably less given the FX adjustment) in unmet FX demand needed for goods and services imports. CBN will need to clear both backlogs, a difficult task given the low levels of net FX reserves.”

Conclusion: The naira’s exchange rate is a topic of concern in Nigeria, and JPMorgan’s prediction adds to the ongoing discussions about its future. The challenges of limited FX liquidity, an incomplete convertibility of the naira, and the backlog of forex commitments are hurdles that must be addressed to achieve exchange rate stability. It remains to be seen how the CBN and the government will navigate these challenges to reach their exchange rate goals.

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