Foreign exchange rate and reserves: A looming devaluation?

Must Read

Burger King Announces Grand Entry In To Nigerian Market, Promises First Restaurant In August 2021

Allied Food and Confectionary Services Limited announced exciting plans to launch and grow the Burger King® brand in Nigeria,...

List of First Bank of Nigeria Sort Codes in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

In 2019, Nigeria’s currency market conditions were relatively stable, thanks to CBN’s continued efforts to intervene via weekly intervention sales, which resulted in over $5.0bn decline in the external reserves in H2-2019 alone. So far in 2020, the external reserves have dipped to $38.3bn as the CBN sustains its intervention. As the year begins to unfold, concerns around the stability of the naira and fears of a possible adjustment are becoming rather apparent.

In our opinion, a devaluation is unlikely in the near term for several reasons. First, developments in the oil market and the size of the reserves at $38.3bn implies that the CBN can continue to defend the local unit for another 6 months. Again, Nigeria is looking to return to the Eurobond market in Q1- 2020, to support the implementation of the 2020 budget. This will support the reserves and boost dollar liquidity.

Foreign exchange rate and reserves: A looming devaluation? - Brand Spur

Finally, the CBN’s current mix of heterodox policies implies that OMO Bills can be exchanged for dollars to preserve the reserves. The above notwithstanding, we do not rule out a possible harmonization of the FX rate at the official window to the I&E window rate, if the pressure in the currency persists. Overall, our outlook for the naira is stable in the near term, with a potential harmonization across rates in the mid to long term.

Read Also:  WHO Supports Nigeria To Become First African Country To Adopt New Epidemic Intelligence Tool
- Advertisement -

United Capital Research

- Advertisement -
Foreign exchange rate and reserves: A looming devaluation? - Brand SpurForeign exchange rate and reserves: A looming devaluation? - Brand Spur
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Foreign exchange rate and reserves: A looming devaluation? - Brand SpurForeign exchange rate and reserves: A looming devaluation? - Brand Spur

Latest News

How The Trump Plaza, Atlantic City, Came to be Demolished

It is not so often nowadays that a building is simply demolished, particularly not one of this scale. We...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Foreign exchange rate and reserves: A looming devaluation? - Brand SpurForeign exchange rate and reserves: A looming devaluation? - Brand Spur