First Securities Discount House (FSDH) Merchant Bank Ltd has projected that the Naira will stabilise against the Dollar in the fourth quarter of 2024.
This projection was attributed to the commencement of Dangote Refinery operations and the October 1, announcement that the Nigerian National Petroleum Corporation Limited (NNPCL) has started Naira for crude with the 650,000 barrels a day refinery.
FSDH Merchant Bank Ltd report titled Priorities for Economic Stability in the Short-Term noted that the Naira’s stabilisation against the USD would be influenced by a reduction in foreign exchange pressure, particularly the Naira-for-crude initiative.
The Nigerian Naira has been on a downward spiral against the United States Dollar since President Bola Ahmed Tinubu removed subsidies and announced he had floated the local currency.
The Naira immediately plunged from about N750/US$ to over N1600/US$ across the nation’s key foreign exchange segments and eroded the profitability of import-dependent companies.
FSDH Merchant Bank noted that petroleum products account for 30-40% of Nigeria’s import bills. Therefore, Dangote Refinery is expected to ease that burden and further enhance the nation’s economy.
The report also highlights a 45.2% surge in trade surplus from a US$6.1 billion surplus in FY 2023 to US$8.9 billion for FY 2024.
Similarly, portfolio investment inflows increased due to the high interest rate. Still, the report noted that the surge in inflows is yet to crystalize.