The Nigerian naira has moved from being overvalued to undervalued following the government’s long-awaited foreign exchange reform, analysts at US-based Bank of America said in…

The Nigerian naira has moved from being overvalued to undervalued following the government’s long-awaited foreign exchange reform, analysts at US-based Bank of America said in a June 28 note to clients as reported by Businessday.

The newspaper quoted the analysts saying, “We now see a USDNGN fair value of 680 per USD (previously 580). However, USDNGN is likely to trade above this level, with year-end 700, and a return to 650-680 in early 2024,” the Bank of America (BOfA) analysts said.

Since Nigeria floated the naira on June 14, the currency has weakened by over 60 percent compared to the N460 per USD level it traded before the reform.

On Tuesday, the currency closed at N780 per USD, according to FMDQ data.

The Bank of America’s fair value estimate of N680 means the naira is now 12 percent undervalued.

“The caution is transition time, aligning rates and still to unlock more USD into the formal market will take some time.

When the dust has settled, the value of the naira should be stronger and appreciating,” the analysts added.

According to Bank of America, higher oil exports ($12 billion more) and a liberalised import regime ($10 billion increase in non-oil imports) can still result in consistent current account surpluses over the medium term which will boost dollar inflows required to support the naira.

“An addition of $12-13 billion on export revenues from higher oil production is moderated by a liberalised imports regime that could add $10 billion as non-oil imports increase. Still a net gain of $2-3billion that strengthens the current account surplus,” the BOfA analysts said.

On June 13, Nigeria decided to float the naira, a marked departure from years of a currency peg that spooked foreign investors and hurt the economy.

Standard Chartered Bank is also of the view that the naira is undervalued following the float and expects the currency to strengthen to N685 per US dollar as Nigeria quickens the pace of implementing reforms needed to fix its foreign exchange market.

“We now forecast USD-NGN at 685.00 at the end Q2-2023 (from 480 previously), rising to 720 in Q3-2023 (520 prior), before appreciating thereafter as the market stabilises,” Razia Khan, head of research, Africa & Middle East and Samir Gadio, head of Africa strategy both at Standard Chartered bank said in a June 14 note to investors.

Nigeria’s bold move towards achieving a unified exchange rate after years of a multiple exchange rate practice drew the criticism of economists is the latest of a list of reforms by new President Bola Tinubu who has also scrapped a costly petrol subsidy program.

https://dailytrust.com/naira-now-undervalued-after-float-bank-of-america-says/

Guys please when last did your country monitored American economy.

That's what you get when you depend on people for your daily bread

This is just the beginning.... First thing tomorrow, hike in Electricity Tariff will hit everyone hard.

Sad thing is that one Kwara Polytechnic Nd2 dropout, living in the suburbs of Ilorin as a part-time agbero, with a heavily padded Itel A2 as his major property and traits of mental disorder will come here to abuse Obidients and everyone who speaks against Tinubu and his tax killing government..

Una never see you anything.

If unethical caution is not taken, these Americans would still devalue our naira and blame it on some economic factor.

Those who forecast that naira will gain over the dollar as mere speculators. Exchange rate doesn't require prayer and fasting. You must be willing to put in the work for naira to gain over foreign currencies.

Sadly, Bola Tinubu is busy gallivanting all over the South West instead of taking steps to kick off projects that will increase Nigeria's FX earnings like harnessing Nigeria's gas reserves, meeting OPEC's crude oil export for Nigeria, and increasing Nigeria's cash crops for export.

Does he even know the level of hardship he has caused for floating the naira and removing PMS subsidy?

Boom Dig_it!!!

And that's how things will be when your only plan is to Hit the ground running without direction.

Another Clueless folk at the helm of affairs'

Bidema:
Guys please when last did your country monitored American economy.

That's what you get when you depend on people for your daily bread

Seems you have not being following Peter OBi campaign, ... all that stats he quotes does it belong to Nig.

The analysts are obviously myopic. Nigeria is an importing country, therefore expecting a dollar to be 650 naira next year won't happen. Tens of billions of dollars from crude oil revenue is not enough to meet the demand of forex.

Naira will be between #550-#650 before the end year

jmoore:
The analysts are obviously myopic. Nigeria is an importing country, therefore expecting a dollar to be 600+ naira next year won't happen. Tens of billions of dollars from crude oil revenue is not enough to meet the demand of forex.

The way some of una dey always talk eh

All the Financial experts/institutions wey don talk say the Naira go stable at 600+ are wrong, nah only you right

What a 🤡

Nairaland ekuke economic analysts will soon flood this thread.

chidiokay:



Seems you have not being following Peter OBi campaign, ... all that stats he quotes does it belong to Nig.

Wetin bring Peter Obi come this matter?

Is he the reason why the Naira is undervalued?

Is he the reason fuel is now N520 per litre and will be N700 per litre in the North?

Is he the reason why 5 seed of tomatoes is now N350?

Is he the reason you entered trailer from Kaduna to Ilorin to celebrate Salah?

Is he the reason there will be increase in electricity tariff as from tomorrow?

Is he the reason students at Federal Universities will start paying double of their fees?

Parachoco:
The way some of una dey always talk eh

All the Financial institutions wey don talk say the Naira go stable at 600+ are wrong, nah only you right

What a

Your Tinubu said "na statistics we go chop". Go and lecture Tinubu on the importance of statistics before you put eyes for my matter.

The supply side is not beign attended to.I dont know how the appreciation will occur.

China with strong economy and powerful leader has been dreaming of bringing down the exchange rate of USD for two decades by all means but .....
RMB to USD
2003 to 2005 100usd - 820rmb
2006 to 2009 100usd - 810rmb
2010 to 2012 100usd - 780rmb
From 2013 till 2022 the lowest was
100usd - 640rmb
Currently the price now is around
100usd - 710rmb
Believe me if it is that easy China would have force down the exchange rate to 100usd = 100rmb

But for Naira
2003 100usd 13,000naira
2023 100usd 70,000naira

The west especially USA have always held us in the throat forcing us to devalue our currency since time immemorial. Pls let the poor breath.

Somebody said he would continue Buhari legacy and zombies want him to be better than Buhari. Is that not stupidity..

The man is busy dishing out new policies just after assumption of office in a bid to come off as proactive president without properly thinking it through..

It's kinda like a coach who uses all his subs in first half without without thinking about how the game might turn out in the second half.

Okay we don hear, USA . If only you can pump tens of billions to us ,after your unsolicited analysis, the way you are giving Ukraine money for a useless war wey no concern Una , we for appreciate the analysis.

Since you can’t , you can shove it up your arse

JasonScoolari:
This is just the beginning.... First thing tomorrow, electricity tariff will hit everyone hard.

Sad thing is that one Kwara Polytechnic Nd2 dropout, living in the suburbs of Ilorin as a part-time agbero, with heavily a heavily padded Itel A2 as his major property and traits of mental disorder will come here to abuse Obidients and everyone who speaks against Tinubu and his tax killing government..

Even tho AEDC have denounce the hike officially, lets even assume the Hike in price happens tomorrow how is that Tinubu fault or got to do with FG

On several occasion Discos have alway increase rate subtlely those using prepaid can relate the only difference these time is they decided to do it openly.
What ever Nigeria is going through right now is eminent, there is no way anybody can fix Nigeria without "pain effect".
There is nothing peter obi can do, except he continues on the steps of GEJ, Buhari no other road is smooth

chidiokay:




Even tho AEDC have denounce the hike officially, lets even assume the Hike in price happens tomorrow how is that Tinubu fault or got to do with FG

On several occasion Discos have alway increase rate subtlely those using prepaid can relate the only difference these time is they decided to do it openly.
What ever Nigeria is going through right is eminent, there is no way anybody can fix Nigeria without "pain effect".
There is nothing peter obi can do, except he continues on the steps of GEJ, Buhari no other road is smooth

Translate this in Hausa please.

The floating of the naira was a disastrous policy given the inflation and forex scarcity. Meanwhile, minimum wage is nothing to write home about. Nigeria are always carried away by frenzy of emotions.

Bidema:
Guys please when last did your country monitored American economy.

That's what you get when you depend on people for your daily bread

It's laughable.

Every hour, Nigerians are monitoring Naira/USD rate even when they don't do any international trade.

Tailors, office workers, landlords, teachers, market men and women etc are discussing dollar rate every day.

Every time the value goes up by any amount, people's blood pressure rises enmass.

My sister has no business with the dollar, but anytime she calls, she will ask if I know that dollar is so and so

The slavish obsession with the dollar is contributing to making more people wanting to buy it, therefore destroying the naira.

People are just 'doing themselves '.

We are not Americans. Dollar is not our currency.

Why are we obsessed with this currency.

I don't think there's any country in the world where whole swathes of the population have deified another country 's currency.

JasonScoolari:
Translate this in Hausa please.

Which work Datti collect

chidiokay:



Which work Datti collect

Enjoy your pain effect.

JasonScoolari:
Enjoy your pain effect.

Even you relocated to Mars ... your family will enjoy the pain effects

jmoore:
The analysts are obviously myopic. Nigeria is an importing country, therefore expecting a dollar to be 650 naira next year won't happen. Tens of billions of dollars from crude oil revenue is not enough to meet the demand of forex.

We actually export more than we import.

Parachoco:
Naira will be between #550-#650 before the end year

Sure thing.

koxyz:
The supply side is not beign attended to.I dont know how the appreciation will occur.

How do you know it's not being attended to?

chidiokay:




Even tho AEDC have denounce the hike officially, lets even assume the Hike in price happens tomorrow how is that Tinubu fault or got to do with FG

On several occasion Discos have alway increase rate subtlely those using prepaid can relate the only difference these time is they decided to do it openly.
What ever Nigeria is going through right now is eminent, there is no way anybody can fix Nigeria without "pain effect".
There is nothing peter obi can do, except he continues on the steps of GEJ, Buhari no other road is smooth

No oo. Peter Obi would have performed magic.

Racoon:
The floating of the naira was a disastrous policy given the inflation and forex scarcity. Meanwhile, minimum wage is nothing to write home about. Nigeria are always carried away by frenzy of emotions.

The government should continue to spend more than $5 billion a year to subsid⁶ise an artificial naira value of N460?

And another $9 billion to subsidise petrol.

And also subsidise many other sectors of the economy.

Mostly with borrowed money.

Are you a baby that government must subsidise every aspect of your life.

Are people in Togo, Republic of Benin, Ghana etc not surviving without ruinous subsidies.

You want the country to go bankrupt like Sri Lanka, Argentina, Lebanon etc

If the country goes bankrupt, naira will go to about N2,500 (or more) to a dollar. I guess your subsidy eye will clear then.

Anyway, the naira is not on a complete free float. The current market price is closer to its real value that N460 was. Government will support the naira if it falls too hard.

It will eventually find its natural level, and that level is likely to be under N700 for some time.

JasonScoolari:
Wetin bring Peter Obi come this matter?

Is he the reason why the Naira is undervalued?

Is he the reason fuel is now N520 per litre and will be N700 per litre in the North?

Is he the reason why 5 seed of tomatoes is now N350?

Is he the reason you entered trailer from Kaduna to Ilorin to celebrate Salah?

Is he the reason there will be increase in electricity tariff as from tomorrow?

Is he the reason students at Federal Universities will start paying double of their fees?

98% of our revenue goes into debt servicing, if Tinubu was not bold to remove subsidy and float the naira to curb fx round-tripping, in 5yrs, you may have to be sold to an Arab master for 50,000naira to feed your family. These pained losers should try and be reasonable (eventhough it's lacking in their faculty) than wailing brainlessly all the time.