Naira Set To Rise Further This Week

The naira will rise further against the dollar on the parallel market this week, analysts and foreign exchange dealers have predicted.

They argued that the peaceful outcome of the presidential election and the hard stance of the President-elect, Muhammadu Buhari, against corruption and economic leakages had boosted investor confidence in the economy.



The naira, which fell to a record high of 228 against the greenback before the election, rose to 210 on Friday.

However, the local currency traded within the 199-199.50 band on the official interbank market, where it has been stuck since February, after the Central Bank of Nigeria pegged the rate.The Acting President, Association of Bureau de Change Operators of Nigeria, Alhaji Aminu Gwadabe, told our correspondent he expected the local currency to rise further this week and beyond.

Gwadabe, who said the naira had firmed to 204 against the dollar on Thursday, believe the trend would continue this week, adding that “the naira may appreciate to something below 197 currently at the interbank market.”

Foreign exchange dealers said the demand for dollar had reduced compared to what happened before the presidential election.

A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, had said the market was trading around the general elections and Buhari’s person.

He had said, “The market has been trading around sentiments and emotions, this is why the naira is appreciating; nothing has really changed in the fundamentals. There was high demand for the dollar before the election because some people predicted post-election violence. Now, the game is over and there is no violence. So, the demand for the greenback is abating.

“The market is also trading around the sentiment that Buhari will fight corruption, strengthen institutions and eliminate wastages. But after his inauguration, the market will trade around the fundamentals like the oil price, external reserves and others.”

In a sign of relief, individuals who had stockpiled dollars to hedge against political risk fearing the election could be marred by violence, were exchanging their funds for the naira, Reuters reported.



“We are not going to see much of movement in the pricing of the naira at the interbank market until the central bank reviews the present measure which has stagnated the rate,” a dealer said.

The naira-dollar exchange rate has yet to witness any change at the interbank market.

Culled from Punch

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