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Dollar To Naira Exchange Will Hit N600 Soon If This Happens

March 4, 2017

The Central Bank of Nigeria (CBN) believes the naira is under speculative attack. So, it wants to run these speculators out of town. Unfortunately, this could be an uphill task for the apex bank. More people are now speculating on the naira.
Interestingly, the inability of commercial banks to provide enough naira to buy up over $600 million injected by the CBN seems to reinforce the apex bank’s position.
“As proof that, when we supplied $500 million to the market, only $371 million was taken up. That tells you that it was all a bubble. The real demand was $371 million,’’ the CBN’s director of communication, Isaac Okorafor, argued.
Actually, before the CBN’s intervention, most analysts had predicted that the naira would have to be devalued. And many traders had exchanged their naira holdings with the greenback. Many, also, invested in government securities, which have very high returns. So, when the CBN’s dollars came in, there was insufficient naira in the market.
With the recent disbursement of January’s FAAC allocations to ministries, agencies, states and local governments, the attack on the naira resumed. Last Friday, the naira depreciated to N465/$ from about N450/$ in the black market.
This is just a sign of things to come. There would be surplus naira to be used in attacking dollars when the government passes the 2017 budget and its implementation commences. The naira could be heading to N600 when this happens.