NAIRAMETRICS
Nigeria’s naira stands poised to continue its upward trajectory, building upon its status as the best-performing currency globally this month, according to a Goldman Sachs Group Inc.
This significant appreciation, marked by a 12% surge against the dollar in April, follows a 1% increase observed in March.
The currency’s resurgence is attributed to capital inflows and interest rate adjustments, aiding its recovery from substantial losses incurred due to two devaluations since June, following the government’s relaxation of currency controls.
According to a Bloomberg News, at one stage those had wiped 71% from its value, but the recent rebound has boosted it to 1,230 per dollar at its most recent official close versus a 1,627-record low on March 8.
Goldman economists, who predicted in February that the naira would strengthen to 1,200 per dollar during 2024, now see it potentially advancing beyond that level after a raft of measures by the central bank.
Those included 600 basis points of cumulative interest-rate increases at policy meetings in February and March, as well as other steps to ease the local scarcity of dollars that fanned volatility and forced companies to the parallel market.
- “This probably can run further; we would see an extension of the move to 1,000 and maybe even sub-1,000,” Goldman’s Andrew Matheny said in an interview. Since Goldman’s call in February, “six weeks have gone by and they’re continuing to hold the line, so that’s encouraging,” he said.
The US lender still maintains its 12-month forecast for the naira at 1,200 per dollar, owing to uncertainty around the ability of the authorities to maintain the reform tempo, though it now sees risks to that upbeat projection.
