Naira recovery against dollar to begin February 2021

The Central Bank of Nigeria (CBN) has said that the naira will start to recover against the dollar and other world currencies from February 2021.

This was included in the latest CBN Business Expectations Survey released by its Department of Statistics.

The companies that responded to the survey, however, anticipate higher interest rates from January, March to June 2021.

According to the report, the surveyed companies said that although the naira has depreciated for several months against the dollar, the appreciation of the local currency against the dollar will start from February 2021 to July of the same year.

The naira was trading at N500 / $ a month ago on the parallel market before appreciating to N465 / $ over the weekend. However, the local currency has held steady at N379 / $ at the official CBN rate, a check showed on the main bank’s website.

The December 2020 Business Expectations Survey was conducted online from December 7-11, 2020, with a sample size of 1,050 companies nationwide.

A response rate of 91.3% was achieved and the sample spanned the agriculture / services, manufacturing, wholesale / retail, and construction sectors. Respondents were made up of small, medium and large corporations spanning both import and export oriented businesses.

On the state of the naira, the managing director of Financial Derivatives Company Limited, Bismarck Rewane, said that the local currency has lost more than 26.72 percent of its value so far in 2020.

He attributed the continued decline of the naira to a greater shortage of foreign exchange supply, demand pressure and rationing.

Rewane noted that converging naira rates would require the adoption of a fully floating exchange rate system determined by the forces of supply and demand.

In addition, the International Monetary Fund (IMF) had called for a unified exchange rate for the naira to promote growth and attract foreign capital.

Last month, the CBN had devalued the naira by N6 to one dollar. The devaluation of the naira brought the local currency closer to the main bank’s exchange rate unification agenda, as recommended by the International Monetary Fund (IMF) and the World Bank.

In a weekly exchange rate for the disbursement of income from International Money Transfer Service Operators (IMTO) for November 30, 2020, all authorized dealers, exchange offices and service providers were recommended to add N6 in all rates.