Naira depreciated to N769.25 against the dollar in the second quarter of the year after the Nigerian Government devalued the naira.
The naira plunged from N763. per dollar traded on Tuesday, June 27 before the Salah holidays on Wednesday and Thursday.
The naira traded as high as N841 per USD above its previous record of N840 on Tuesday.
Between January 1 and June 30th, 2023, the naira devalued from N449.51 per dollar to N769.25.
Consequently, the currency has lost 72.3 per cent of its value.
The Bank of America released a report saying that the naira is underpriced.
According to the BOA, since the floating of the currency, the naira is undervalued by 12 per cent of its value.
BOA said, “We now see a USDNGN fair value of 680 per USD (previously 580). However, USDNGN is likely to trade above this level, with a year-end N700, and a return to N650-N680 in early 2024.
“The caution is transition time, aligning rates and still to unlock more USD into the formal market will take some time. When the dust has settled, the value of the naira should be stronger and appreciating.”
The naira was floated by the Central Bank of Nigeria at the directive of President Bola Tinubu who promised to harmonise exchange rate windows as recommended by the International Monetary Fund and the World Bank.
He said he would sanitise the monetary policy directives of the apex bank that would allow the flow of foreign exchange into the country.
Since the policy was made, the naira has traded slightly above the black market rate, which also closed at N770 per dollar.
Before the CBN harmonised the exchange rates, the naira was pegged at N460 against the dollar by the CBN.
Ayo Teriba, the Chief Executive Officer of Economic Associates, told THE WHISTLER that liberalising exchange rates would first allow the currency to trade close to the parallel market rate.
Teriba said it would later gain against the dollar when liquidity hit the system.
