Finance

Economist: Official exchange rate may depreciate to N420 to the dollar

The naira this morning reversed its two weeks loss to the dollar in the parallel market, appreciating by N20 to N470 per dollar.

The managing director of Financial Derivatives Company, Bismarck Rewane, has projected that the naira will depreciate to N420 against the dollar on the official window by the end of 2021.

Rewane was speaking at a virtual event tagged ‘Vantage Forum 2021’, organised by The Elevation Church (TEC) on Saturday.

The economist also projected that the naira will exchange at N470 to the dollar at the parallel market.

At present, the naira trades at N480/$ at the parallel market and N380 at the official rate operated by the Central Bank of Nigeria.

This, he said, is based on a worst-case scenario where Nigeria produces 1.5 million barrels per day (bpd) with an inflation rate of 16.15 percent in the full year.

Read Also:  Banks trading below minimum liquidity ratio – MPC members

“In the worst-case scenario, it goes the other way, in all cases you find that the average exchange rate at the end of the year officially will be at 470 in the parallel market and the Central Bank of Nigeria about 420, bringing the average to 438,” Rewane explained.

In the event that Nigeria is able to produce 1.8 million barrels of crude oil per day at $60 per barrel, Rewane said the naira would trade around N464/$ with an inflation rate at 15.78 percent at end of the year.

Nigeria’s daily crude oil production will be pegged at 1.51 million bpd between January and March due to voluntary production cuts by the Organisation of Petroleum Exporting Countries (OPEC) to mop up the supply glut in the market and shore up oil prices.

Get more stories like this on Facebook, Twitter and Telegram