March 30 (Lagos) - The Naira recovered to 321 against 1 US Dollar on the parallel market today from 323 close of yesterday.
Naira is expected to gain further after the passing of the 2016 budget by the National Assembly last week.
Brent Crude oil prices are hovering just below $40 a barrel mark which is above the $38 mark that has been budgeted in the 2016 budget. If oil prices can reach the $55 a barrel mark then we can expect a major recovery in the Naira at parallel markets.
The Naira needs to recover to control inflation which is heading above 12%.
The CBN has also finally gotten its act together and increased the benchmark lending rate above the inflation mark to lend some support to the Naira. We feel the CBN can do much more in this area by sharply increasing the benchmark lending rate further to support the Naira.
Their moves are already taking effect in the parallel market because that is what happens when you increase interest rates. Back in November the CBN made a blunder by reducing the benchmark lending rate which led to destruction of Naira at the parallel markets. Now we are beginning to get some modest recovery and we feel it can gain momentum.
reporting for easykobo.com on Wednesday, March 30 2016 from Lagos, Nigeria
If you would like to post comments! Please log in.