Goldman Sachs Group has confirmed that the Nigerian Naira has established itself as the top-performing currency globally in April, with a surge of 12 per cent against the dollar. This impressive appreciation follows a 14 per cent surge in March, according to Bloomberg.
The rally of the Naira has been attributed to capital inflows and consecutive interest rate hikes, supported by effective policy management by the Central Bank of Nigeria (CBN). Goldman Sachs economists, previously forecasting a strengthening of the Naira to N1,200/$ in 2024, now anticipate it could surpass this level due to aggressive measures by the CBN.
In an interview with Bloomberg, Goldman Sachs economist Andrew Matheny suggested that the Naira could potentially trade even lower against the dollar, possibly reaching N1,000 or even sub-N1,000. He commended the CBN for its steadfastness in policy management, which has contributed to the Naira’s sustained rally.
The optimistic forecast by Goldman Sachs aligns with the sustained strength of the Naira observed across both the parallel and official segments of the foreign exchange market. Notably, the Naira has demonstrated significant appreciation against the dollar, reaching notable milestones in recent trading sessions.
At the Nigerian Autonomous Foreign Exchange (NAFEM) window, the Naira closed at N1,142.38 per dollar on Friday, reflecting an impressive appreciation of N88.23 within a short period. Similarly, on the parallel market, the Naira continued its upward trend, closing at N1,150 per dollar, compared to N1,240 per dollar earlier in the week.
The CBN, under the stewardship of Governor Olayemi Cardoso, has implemented bold strategies aimed at stabilizing and fortifying the Naira. These initiatives have attracted foreign investment and alleviated local dollar shortages, contributing to currency stability.
Recent directives by the CBN, such as prohibiting the use of foreign currency-denominated collateral for accessing naira loans, have received support from industry stakeholders. The Association of Bureaux De Change Operators of Nigeria (ABCON) believes that these measures will enhance dollar liquidity, bolster reserves, and fortify the financial services sector.
The CBN’s proactive stance, including interest rate hikes and policy adjustments, has effectively addressed economic challenges and reduced volatility in the foreign exchange market. President Bola Tinubu’s leadership and decisive reforms have played a crucial role in driving the country’s economic resurgence, laying a strong foundation for sustainable growth and stability.