Naira Seen to Stabilise if Announced $10bn Flows Into Economy

Nigeria’s currency will stabilise in the short-term if the expected $10 billion flows through the economy, analysts said on Monday.

Naira on Monday strengthened against the dollar, gaining 1.85 percent at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Naira appreciation comes after Wale Edun, the finance minister said Monday that Nigeria is expecting as much as $10 billion in new foreign currency inflows in the next few weeks to ease acute dollar shortages in the foreign exchange market.

After trading on Monday at the NAFEM, one dollar was quoted at N793.34, which was stronger than N808.27 quoted on Friday, data from the FMDQ showed.

Willing buyers and willing sellers offered and sold at a bid rate of N900/$ high and N701/$ low. The daily FX market turnover increased marginally by 2.89 percent to $81.55 million on Monday from $79.26 million recorded on Friday at the official market.

Charlie Robertson, head of Macro Strategy, FIM Partners UK Ltd, said $10bn should help but still the interest rate differential with $ bonds will weigh against the naira. If domestic and foreign investors make similar amounts in $ as naira, most will choose foreign exchange.