The Nigerian naira has been volatile on the parallel market in recent times, weakening against the dollar but it may start appreciating next week.
The currency was seen stable against the dollar towards the end of this week, although it lost two units against the greenback. It exchanged at 320 per dollar at the end of this week on the parallel market as against 318 per dollar last week.
Although there’s a wide margin between the parallel and the official market, President Muhammadu Buhari anti-devaluation stance stands staunchly. According to reports, the decision of the CBN not to devalue is one of the reasons the currency had been losing value against the dollar of recent. However, the currency may start appreciating against the dollar next week going by recent events.
Here are three reasons why:
1. The dollar is weakening:
The US dollar has been weakening against major currencies recently. This is reflective in the price of a barrel of crude oil- which has hit its highest point in 2016. This factor may cause the naira to appreciate against the dollar next week.
2. 2016 Budget:
With the controversies surrounding the 2016 budget almost over, the document might be signed next week. There are reports the senate committee and the presidential committee have concluded work on the document. It’s also expected that President Buhari will assent the document next week. This is expected cause an inflow of dollars into the country via investments. In addition, investors’ faith in the government will increase, making them to bring their investments into the country.
3. Less demand for dollars:
The demand for dollar has been abating as it’s clear that FG won’t devalue the naira. This has caused several industries to seek their raw materials locally.