JP Morgan, a respected multinational financial services firm, has endorsed President Tinubu’s naira float with a projection that shows it expects the currency to regain lost value and strengthen against the dollar in the coming months.
The projection was contained in a statement released by the financial institution on Thursday. It praised Tinubu’s reform of the country’s monetary policy, adding that his speed of execution has come as a positive surprise.
“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 administration’s reform agenda, however, the speed of execution has proven to be a positive surprise.”
President Bola Tinubu opened his presidency with reforms and fundamental changes to the country’s economic management. They include the termination of the costly oil subsidy regime, the facilitation of a unified exchange rate system, and the suspension of Godwin Emefiele, the infamous Governor of the Central Bank who pursued unorthodox policies that discouraged growth.