In news reports, the Naira has continued its strong showing in the black market performing at less than NGN1,000 to a dollar in some market segments. Strengthening against major currencies on Monday, 15 April 2024 with the dollar seeing an increased safe-haven demand following the recent airstrikes on Israel by Iran putting it at more than five-month highs. It may be recalled that Goldman Sachs in Q4 2023 predicted the current trajectory of the Naira to exchange at below N1000 at some segments of the parallel market has been recorded by the evening of Sunday, 14 April. The United States Investment Bank had forecasted the Naira’s bullish performance on the foreign exchange market could propel it to trade at less than NGN1,000 per US dollar in the year. Goldman Sachs projected the Nigerian currency rally and its capacity to recover from large losses after two devaluations since last June being bolstered by capital inflows and successive interest rate hikes. In March, the investment bank projected that the Naira would play at N1,200 per dollar in 2024.
However, the Central Bank of Nigeria (CBN) has implemented several policy initiatives in recent months to bring stability to the foreign exchange market. The CBN increased interest rates to 24.75% at the most recent meeting of the Monetary Policy Committee (MPC), which helped it recover losses from the two devaluations that occurred since June of last year. The markets are also seeing consistent gains by the naira as CBN’s interventions ensue including the selling of Forex to Bureau De Change (BDC) operators at a revised rate. The market anticipates higher inflows of US dollars from the sale of foreign currency bonds in the second quarter as revealed by Wale Edun, the minister of finance, and the coordinating minister for the economy—as the government offered high-yield short-term debt products at a premium to attract the overseas capital into the economy.
