American multinational financial services firm, JP Morgan has said that Nigeria will soon benefits its decision to float the naira despite initial inconvenience.
The reputable financial institution applauded the decision of the federal government to erase the multiple exchange rate which many analysts say was hampering the economy.
According to the analysis of JP Morgan, the decision means that the naira will stabilise and gain against the dollar in months to come.
It said, “While it will take a few days for USD/NGN spot to settle, we fully expect an initial overshoot towards the parallel market rate of -750 or higher, after which, we expect USD/NGN to settle in the high 600s over [the] coming months,” the statement reads.
“We remain long USD/NGN via non-deliverable forwards (NDFs) as well as OW emerging markets bond index global diversified (EMBIGD) index as we expect further positive catalysts to materialise in the near-term.
“We believe there is room for incremental positive surprises with respect to reform depth and execution speed. We had high expectations for the new administrations reform agenda, however, the speed of execution has proven to be a positive surprise.”
On Wednesday, the Central Bank of Nigeria announced the unification of all segments of the forex exchange (FX) market, signalling that the exchange rate will now be decided by market forces.
The naira, on Wednesday, during trading hours, sold for between N750 and N755 per dollar before appreciating to close at N664.04.