An economic expert, Mr Bismarck Rewane, has warned that the naira could depreciate to depreciate to 470-475 against the dollar in the parallel market by November and December if oil prices stay at $40-$42 per barrel.
Rewane stated this in a presentation at the Lagos Business School Breakfast Session.
Currently, naira is trading around 462 to 465 against the dollar in the parallel market.
Rewane noted that the supply of foreign exchange would be further limited if oil continues to trade below $41 per barrel.
He said the resumption of international flights, trading and manufacturing activities would heighten forex demand pressures.
Rewane said, “Naira [is] likely to depreciate to trade around 470-475 in November/December. Convergence of multiple rates will continue but unification is unlikely.
“The CBN will maintain its forex rationing stance and intensify efforts to keep the naira stable. External reserves to likely fall towards $34bn in the coming months.”
“As Nigeria ponders IMF’s conditionalities, CBN could succumb to pressure and devalue the naira to N390-400/$,” he added.
He also suggested that the the 2021 budget is likely to be revised, as a result of the impact of lower oil prices and higher expenditure and the #EndSARS crisis, which will deepen the economic crisis and delay the recovery.
According to Rewane, CBN’s Monetary Policy Committee meeting in November would deliberate on the need to provide further stimulus in the economy.
He also noted that a second wave of COVID-19 and global lockdowns would trigger a fall in commodity prices, trade activities, capital flows and remittances.
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