Forex

KPMG Nigeria Forecasts FX Rate Range of N650/$ to N750/$ After Currency Floatation

KPMG Nigeria has projected that the foreign exchange (FX) rate in the country will range between N650/$ to N750/$ following the recent floatation of the currency.

Published

11 months ago

June 16, 2023

Investors King

KPMG Nigeria, a leading professional service company, has projected that the foreign exchange (FX) rate in the country will range between N650/$ to N750/$ following the recent floatation of the currency.

KPMG’s forecast, shared in their flash notes published on June 15, 2023, sheds light on the potential outcomes of this bold move.

KPMG Nigeria emphasized the importance of implementing supporting policies that encourage and guarantee a steady supply of FX in order to achieve relative equilibrium in the FX market.

The company highlighted the need for proper decentralization of the FX supply environment, with the Central Bank of Nigeria (CBN) still acting as the primary supplier of FX.

“We estimate that the FX rate will range within N650 to 750/$ in the near term. Relative equilibrium will depend on how quickly supporting policies are introduced that encourage and guarantee FX supply,” stated KPMG.

By taking the bold decision to float the currency, the gap between the official and parallel markets is expected to narrow over time. KPMG Nigeria highlighted the potential reduction in arbitrage opportunities and the discouragement of round-tripping, which would foster increased confidence in the Nigerian economic environment.

“By collapsing all its official multiple FX windows into its I & E window and granting commercial banks and dealers in the forex market the authority to sell forex freely, the government has initiated the first of several steps it needs to take to unify the FX rates,” explained KPMG.

The immediate reaction to the currency floatation was evident, as the official I & E window witnessed a significant jump, closing at N664/$ on the day of the announcement compared to N473/$ the day before.

“The eventual anticipated convergence of the FX rates will also immediately improve much-needed government FX-related revenue, which helps to slow the pace of debt accretion and improve expenditure on physical and social infrastructure,” added KPMG Nigeria.

KPMG Nigeria also highlighted the potential unintended consequences of these actions. A reduction in value-added tax (VAT) and companies’ income tax may occur if consumption expenditure shrinks, leading to a decline in corporate earnings. Businesses may also face increased costs due to unexpected FX losses resulting from dealing with higher rates during the financial year.

“To avoid any reversals to gains experienced in the last few weeks, sustain the positive momentum and atmosphere of cautious optimism currently being witnessed, it is important that clarity, especially relating to the remaining FX and monetary policy supporting structures, are worked out,” cautioned KPMG Nigeria.

Additionally, KPMG recommended that the government introduces erstwhile promised inflation support measures post-PMS subsidy removal to minimize disruptions in consumer demand and business earnings. They suggested short to medium-term income tax, value-added tax, and corporate tax reliefs, as well as non-cash-based incentives that would be less inflationary.

“The government should lead by example also by reviewing and cutting out wasteful expenditure just as it advocates for the public to bear the short-term pains from needed restructuring and reform,” urged KPMG Nigeria.

While KPMG acknowledged the short-term challenges that may arise, they believe that the combined impact of these key monetary and fiscal policy decisions will be positive, especially in the long term.

The projected FX rate range of N650/$ to N750/$ following the currency floatation indicates a new era for Nigeria’s economy. With careful implementation of supporting policies and a focus on sustainable growth, the country has the potential to attract investments and achieve greater economic stability.

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Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

3 days ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

3 days ago

April 25, 2024

Samed Olukoya

Naira to Dollar Exchange- Investors King Rate - Investors King

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,260 and sell it at N1,250 on Wednesday, April 24th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,300
Selling Rate: N1,290

Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

4 days ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.