- Nigerian naira may experience depreciation to about N401 per a $1 mirroring the rate of 12-month non-deliverable forwards quoted on Bloomberg.
- Afrinvest project that Nigeria’s Gross Domestic Product, GDP, will grow by 2.5% in 2019 as against 1.9% recorded in 2018.
- The investment firm also notes that the emergence of a new CBN governor by mid-2019 may result in a new exchange rate policy.
The Nigerian Naira may hit N400 per dollar
towards the end of 2019 when investors retreat from emerging and
frontier markets, according to a report by Afrinvest.
Chief among the issues is the appointment of a new Central Bank of Nigeria (CBN) governor mid-2019 and the direction of oil production and crude oil prices at the global market.
In its report, “On the Precipice, Nigerian Economy and Financial Market 2018 Review & 2019 Outlook,” Afrinvest project that Nigeria’s Gross Domestic Product, GDP, will grow by 2.5% in 2019 as against 1.9% recorded in 2018.
Commenting on the report, Victor Ndukauba, the Deputy Managing Director, Afrinvest, said the CBN has enough reserves to support the FX market in the first half of 2019.
Why naira may breach stability record in 2019
On the foreign exchange market, the report
states that the exchange rate may breach resistance levels in 2019
unlike the stability recorded in 2018.
“In 2019, the currency faces a downside
risk. Foreign capital flows may remain constrained due to both political
risk and elevated interest rate in advanced economies. This will
heavily impact Nigeria’s external position and weaken external reserves
accretion.
“However, the CBN has guided towards a tight monetary policy stance which should help attract capital inflows.
“We
also expect a stable current account surplus to support reserves
accretion, if oil production remains steady at 2.1mb/d as expected, and
oil prices remain above $50.00/b. Overall, we believe the exchange rate
will remain stable, especially in H1:2019, since the CBN has ample
reserves for interventions. However, we note that pressures on the
currency will intensify in H2:2019.”
The report, however, noted that the Nigerian
naira may experience depreciation to about N401 per a $1 mirroring the
rate of 12-month non-deliverable forwards quoted on Bloomberg.
The research and investment firm also noted
that the emergence of a new CBN governor by mid-2019 may result in a new
exchange rate policy.
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