Naira Skids as Fitch, Goldman Sachs Differ on FX Outlook
The naira exchange rate skidded in the forex market following Fitch Ratings bearish estimate that the local currency would close the year at N1450 in Dec. 2024.
The projection came amid claims that the local currency is grossly undervalued. It also goes against the predictions of other naira bulls, such as Renaissance Capital, Goldman Sachs, and Financial Derivative Company, who all said the naira would settle at N1000 or less.
In the official window on Wednesday, the naira exchange rate depreciated by 0.8% to N1,488.60 per US dollar, according to data from FMDQ Securities Exchange for daily quotes.
SAMTL attributes naira depreciation to the waning effects of CBN interventions in the FX market. Oil prices rebounded slightly as the OPEC+ decision to increase production later in the year continued to weigh on the market. Fitch Ratings projected that the exchange rate will average about N1200 per US dollar this year and end the year at N1450 per US dollar.
“And in terms of next year, we see a gradual depreciation, but it also depends largely on the momentum of the foreign exchange reforms, a Fitch analyst said at a webinar. In April, Goldman Sachs updated its position on the naira, saying the local currency could extend gains to trade below N1,000 to the US dollar.
In an interview with Bloomberg, Andrew Matheny, an economist at Goldman Sachs, said the greenback could further trade below the projected N1,200. Recall that the investment firm had predicted that the naira exchange rate would close in 2024 at N1,200.
But rapid gains in the official window saw the exchange rate breach the ceiling, and draw close to the 1000/$ level before it reversed the trend. #Naira Skids as Fitch, Goldman Sachs Differ on FX Outlook Naira to End 2024 at N1,450 Per US Dollar, Fitch Forecasts
