Naira may depreciate further to N520/$ this year, says expert

By Odunewu Segun

While the naira has been steady at about the same price it closed 2016 at-N490/$, and closing the first trading day of 2017 at a stronger N304/$ at the official market, a financial expert, Bismarck Rewane, said the naira is likely to fall to N520 within the year at the parallel market.

Rewane, the Chief Executive Officer of Financial Derivatives Company Limited, in a bulletin containing the FDC’s economic outlook for 2017 released on Wednesday, forecasted that the naira would trade at N350/dollar at the Interbank Foreign Exchange Market, adding inflation would slow down this year to between 15 per cent and 17 per cent, after spiking towards 20 per cent.

“2016 was a year like no other. Five most unlikely events occurred including the coincidental death of George Michael on Christmas Day and the naira testing N500/dollar in the parallel market. The average Nigerian had nothing to cheer and felt it was a year in which he was economically raped, no thanks to a recession and a flawed forex market.

“2017 is looking slightly better with projections of positive growth of 1.2 per cent. This will happen only upon three conditions: Engagement in the Niger Delta to bring production back up to 2mbpd; reduction in interest rates and an increased supplementary budget; and an overhaul of the forex market to ensure transparency, liquidity and price efficiency.

Recall that the naira which has been steady at N490 to a dollar at the parallel market survived speculations that it would depreciate to N500 to a dollar by the end of 2016

At the Bureau De Change (BDC) window, the dollar exchanged at N399, CBN controlled rate, while the Pound Sterling and the Euro traded at N598 and N510, respectively. Trading at the interbank market saw the dollar closed at N305.

Traders at the market said that Forex scarcity was still having its toll on the market.

National Daily gathered that in spite of the one billion dollars backlog of Forex cleared by the CBN, the Naira has remained within N490 to a dollar.

Meanwhile, Alhaji Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON) said that the figure was a far cry from the monthly Forex demand in the country.

“The $1b inflow is far less than what the economy consumes. The entire FX market is over 20 billion dollars monthly. The cleared backlog of the CBN are funds that came through the FMDQ OTC foreign investment that came into the economy over time and the CBN has no option than to redeem it, to close the increasing gap of investors’ confidence,’’ Gwadabe said.

According to a currency analyst at Ecobank Nigeria, Kunle Ezun, the challenge at the forex market is still the supply issue; price (exchange rate) is determined by the interplay of demand and supply.