The naira is likely to strengthen further on the black market as the Central Bank of Nigeria steps its interventions in the foreign exchange market.
According to currency analysts and economic experts, the naira will record further gain in the coming days as the CBN aims to narrow the gap between the official and parallel market rates.
The naira strengthened to 385 to the dollar on the black market on Thursday, from 395 on Wednesday, and from 457 last Thursday.
On the official interbank market, the naira closed at 308 to the dollar, against 306 last Thursday.
“We see the exchange rate converging at some point between 380-400 naira to the dollar in the near term because of the determination of the central bank to increase dollar supply,” the President, Association of Bureau De Change operators, Aminu Gwadabe, said.
A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, said the dollar might sell at 375/380 next week if the central bank continued its intervention programme in the forex market.
“It depends on what the CBN is targeting; but the good thing is that when the dollar sells for between 375 and 380, the incentive to do round-tripping will not be there anymore and this is good for the market, the economy and the country,” he added.
The CBN was planning to sell $100m in currency forwards on Thursday to be delivered within the next 60 days.
The local currency has been appreciating in recent weeks on the back of the continued and consistent interventions in the forex market by the CBN.’
Meanwhile, the Kenyan shilling is expected to remain stable over the next week, mainly owing to importers’ demand for dollars outweighing inflows from farm exports.
Market participants said there was no consensus on what policymakers are likely to do when they meet to set interest rates on March 27, according to a Reuters report.
The Tanzanian shilling is seen trading in a tight range against the dollar, helped by a slowdown in demand for the US currency.
“The shilling will likely remain range-bound next week due to subdued business activity. Demand and supply of dollars are largely matching each other at the moment,” a trader at a commercial bank told Reuters.
The Ugandan shilling is seen weakening moderately in the days ahead, weighed down by a typical surge in appetite for hard currency from manufacturers towards month-end.
Ghana’s cedi would be expected to remain bullish next week, bolstered by strong forex liquidity inflows amid weakening dollar demand, analysts said.
After touching record lows of 4.742 to the dollar this month, the cedi has rallied steadily to reach 4.40 by mid-morning on Thursday, compared to 4.56 a week ago. It is down about four per cent since January, Reuters data shows.
“We expect a sustained bullish cedi in the face of comparatively weaker demand for the greenback amidst sufficient forex supply,” analyst at Accra-based Dortis Research, Joseph Biggles Amponsah, said.
“However, to extend this gain into the next quarter, the supply of dollars to the market needs to be sustained.”
The kwacha is expected to hold firm against the dollar next week because of hard currency conversions by companies preparing to pay salaries and other month-end obligations.
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