Next week, the Naira is expected to appreciate to below N1,000 per dollar on the black market due to optimism over the Federal Government’s intentions to support dollar liquidity in the foreign currency (FX) market.
“There are enough dollars in the market now. What we are seeing is that people are no longer hoarding and that has increased liquidity in the market,” Abubakar Ibrahim, an FX trader, said Friday.
“At this rate, the dollar could crash to below N1000 next week,” Ibrahim said.
The local currency has gained 22.13 percent (N290/$) versus the dollar in the last few days, while the dollar dropped to N1,020 on Friday from a height of N1,310 on the black market on Thursday last week.
On Friday, street vendors were already purchasing dollars at a rate of N980, as opposed to N1,130 on Thursday. Speculators are now selling the dollars they had been storing for arbitrage in order to prevent losing money.
Prior to January, when international schools reopen, people would purchase dollars for future necessities like school fees; but, as a result of government measures to boost the supply of dollars, demand has decreased with the hope that the rate will soon decline.
Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise, attributed the naira resurgence to inflows from oil swap agreements and loans.
“The government has told us the steps they are taking to improve liquidity. They talked about NNPC, swap or forward sales, which were to bring about $3 billion, recently they talked about $10 billion expected into the economy,” Yusuf said.
“So, it is possible that some of those things have started to trickle in and just as they said, their priority is clearing off the backlog in order to begin to restore confidence in the system. I think that is what is happening,” Yusuf added.
