Naira Bulls Keep things Hot for FX Speculators
Amidst rapt of estimates showing that the naira is overwhelming underpriced, the sustained recovery of the local currency has kept things hot for US dollar.
The outlook on the local currency remains positive as the Central Bank of Nigeria continues to flood forex markets with subsidized US dollar.
In its latest move, the apex bank sold $10000 to 1508 Bureau de Change at N1101 per greenback. This is expected to influence exchange rate direction in the alternative currency market.
At the official window, the naira has started fresh gaining streaks on Monday, where it has moved from N1251.05 to N1245 during the intraday trading sessions.
FX speculation has reduced drastically following improved forex inflows into official and parallel markets. The Nigerian autonomous forex market recorded a 42% growth in FX inflows in March, according to data from FMDQ Securities Exchange.
Already, exchange rate has inched very closely to Goldman Sachs Naira bulls’ exchange rate of N1200.
The investment firm had expected the recovery to be within 12 months but fast and furious FX sales and cap on spread has shortened the time horizon for the fair value results.
Some Broadstreet analysts told MarketForces Africa that exchange rate may likely appreciated strongly in April as government plans foreign currency bonds sales in Q2.
“It is a wrong time to speculate in Nigeria’s forex market as Yemi Cardoso seems to have a strong resolve to drive naira repricing across FX markets”, LSintelligence Associates Research team said in a statement.
