Fakoyejo OlalekanThe exchange rate between the United States’ dollar and Nigeria’s naira has been projected to rise to N520/$1 next year, indicating the naira will extend its devaluation run into 2023.
According to Bloomberg, Bank of America Economist, Tatonga Rusike, made the projection to clients in a letter. This contradicts the projection of President Muhammadu Buhari’s administration for naira next year.
President Buhari had stated that the foreign exchange between the naira and the dollar will fall to N435.57/$1, below the current level of the N440/$1 the rate hovers.
This means Bank of America expects the naira will devalue by -18.1 per cent, which means the cost of buying the United States currency in the official exchange market is projected to rise by N80, when the N520 is pegged with the N440.
Rusike said, “We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as N520 per USD.”
The Bank of American economist said due to limited government external borrowing, the naira will likely come under increasing pressure, although the devaluation is expected to kick in after the February 2023 presidential election in Nigeria.
Recall that Nigeria is currently battling with dollar scarcity, which has seen the Central Bank of Nigeria (CBN) halt sales of forex to the Bureau De Change operators since July 2021.
The ban on Bureau De Change operators has pushed the exchange rate between the dollar and naira to N742/$1 in the black market, as limited American greenback piles pressure on the Nigerian currency.
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