April 12, (THEWILL)- Nigeria’s naira is the world’s best-performing currency this month, appreciating 12% against the dollar, says Goldman Sachs.
Forecasting further gains, the international investment bank sees the Naira appreciating more against the dollar and even below N1000/$.
According to a Bloomberg report, at one stage, the naira had wiped 71% from its value, but the recent rebound has boosted it to 1,230 per dollar at its most recent official close versus a 1,627-record low on March 8.
Goldman economists, who predicted in February that the naira would strengthen to 1,200 per dollar during 2024, now see it potentially advancing beyond that level after a raft of measures by the Central Bank.
These included 600 basis points of cumulative interest-rate increases at policy meetings in February and March, as well as other steps to ease the local scarcity of dollars that fanned volatility and forced companies to the parallel market.
“This probably can run further; we would see an extension of the move to 1,000 and maybe even sub-1,000. Six weeks have gone by and they’re continuing to hold the line, so that’s encouraging,” Goldman’s Andrew Matheny said in an interview.
The US lender still maintains its 12-month forecast for the naira at 1,200 per dollar, owing to uncertainty around the ability of the authorities to maintain the reform tempo, though it now sees risks to that upbeat projection.
The currency measures are part of bold steps introduced by President Bola Tinubu after he took power in May to end Nigeria’s years of economic stagnation.
The reforms, which included scrapping fuel subsidies, have sent inflation to a 28-year high and fanned a cost-of-living crisis that’s caused severe hardship for ordinary Nigerians.
