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Naira to strengthen to N1,200 in 12 months – Goldman Sachs
According to global investment bank Goldman Sachs, there is anticipation for the Nigerian naira to appreciate against the US dollar in the coming twelve months.
The bank predicts the exchange rate of the local currency to reach 1200 against the greenback in the short term, citing potential policy reforms that could bolster the currency’s recovery.
In a research report released recently, the New York-based financial institution pointed out positive signs such as the recent increase in interest rates by Nigerian monetary authorities and a substantial N1.6 trillion bill auction conducted by the central bank. These developments indicate a shift away from previous policies that restricted the naira’s free trade and suggest a positive outlook for the currency’s future.
“These developments have prompted us to shift to a constructive outlook for the Naira, which our FX strategists expect to appreciate to NGN 1200 vs. the USD in 12 months,” Goldman Sachs said.
READ ALSO: Naira plunges low at foreign exchange market despite security measures
“That said, the policy steps implemented to date are only a first step in the right direction, and we think more follow-through is required to achieve a durable macro stabilisation.”
Outlook for the naira exchange rate has been upbeat after a raft of measures including clampdowns on street traders, whose speculative activities have pressured the currency for long.
The central bank at the end of January gave a tall order to lenders to ensure that the net open position limit of their foreign assets and liabilities does not “exceed 20 per cent short of 0 per cent long of shareholders’ fund unimpeded by loss,” giving them only 24 hours to comply with the directive.
In the days that followed, trading in the dollar, which had been in low supply in the currency market, more than doubled, with trade volume hitting $440 million on 3 February, the highest level since June 2022.
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