In Nigeria, the dominance of the US dollar is now facing a challenge. The region’s national currency, the Naira is now putting up a robust front, battling the dollar in a new interesting development.
The Naira is expected to rebound by 25% against the US dollar by the end of 2024, according to a Bloomberg report. If the Naira supremacy continues, the US dollar will loosen its grip in Nigeria, encountering another dent in its colossal global prestige.
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Naira Up, Dollar Down: What’s Going On?
Analysts at Goldman Sachs have come up with a new forecast for the Nigerian Naira. Analysts have predicted the Naira’s rising dominance in the region. The firm is expecting USD/NGN to rally up to 25% by the end of 2024.
Similarly, the analysts at Standard Chartered and Citigroup Inc. have echoed similar projections, anticipating the Naira to rebound shapely by the end of this year.
“In more benign conditions, we could test even 1,100 naira a dollar or lower,” as shared by Razia Khan, Chief Analyst, Standard Chartered.
Why is the Naira Rising?
Nigeria’s consistent efforts to establish its currency on top of the radar have started to bear fruit. The Naira is gaining strength against the USD. The Naira is gaining strength against the USD as the region continues to foster technological and economic advancement to pique foreign interest.
Additionally, Khan told Bloomberg that some “forex backlogs have been cleared, monetary policy has been tightened, and the transmission mechanism of policy is now more effective.”
President Tinubu’s new leadership regime is gaining credit for giving the Naira global recognition. Tinubu has made multiple administrative changes to the regime. This includes efforts to liberate the naira and free up “local dollar liquidity.” The change primarily entailed fixing the central bank administration and bringing it under governor Olayemi Cardoso’s review.
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USD Threatened From All Sides
The rise of multipolar currencies is now giving a direct hit to the US dollar’s dominance. The USD is knee-deep in troubled waters, facing extreme volatility and unpredictability from major financial fronts.
Additionally, with the BRICS alliance gaining strength alongside calls to end the USD echoed by President Putin of Russia, the dollar now stands at a weaker threshold.