LAGOS, NIGERIA (VOICE OF NAIJA) – One of the leading investment banks in the world, Goldman Sachs has anticipated a strengthening of the Nigerian naira against the US dollar over the next twelve months.
Referring to the recent central bank policy reforms aimed at bolstering the currency’s recovery, Goldman Sachs said the exchange rate may reach N1,200 to a dollar in the short term.
The bank’s optimism stems from significant policy shifts, including the recent upward adjustment of interest rates by Nigerian monetary authorities and a substantial N1.6 trillion bill auction conducted by the central bank.
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In a research note issued late Thursday, the New York-based financial institution said these measures signal a departure from previous policies that constrained the naira’s free trade.
Goldman Sachs emphasised that while these initial policy steps are encouraging, sustained efforts are necessary to achieve lasting macroeconomic stability.
Despite challenges, the outlook for the naira exchange rate has brightened, supported by measures such as crackdowns on street traders engaging in speculative activities that strain the currency.
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Recent directives from the central bank, such as imposing limits on foreign assets and liabilities for lenders, have also contributed to increased dollar trading volumes.
The positive momentum in capital inflows and the transition from negative to positive real interest rates indicate a turnaround in Nigeria’s currency crisis, according to Goldman Sachs.
The naira has experienced significant depreciation against the dollar in recent months, losing about 70 percent of its value due to successive devaluations.
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However, foreign participation in Nigerian assets has surged, surpassing $1 billion last month, while remittances from abroad have more than quadrupled to $1.3 billion.
Goldman Sachs highlights the importance of positive real interest rates and robust capital inflows in addressing Nigeria’s external liquidity challenges and enhancing stability in the foreign exchange system.