• usd-ngn reaching 220 in q3-2015: standard Chartered

    Source: FxWire Pro - Commentary / 24 Mar 2015 01:46:23   Eastern Standard Time

    Standard Chartered notes.....

    • For portfolio flows to resume, USD-NGN will need to move to a higher and moresustainable level. While we think the CBN will eventually allow this adjustment, and see USD-NGN reaching 220 in Q3-2015, this seems unlikely for now. 

    • Thus we expect the CBN to pursue its special intervention FX auctions at an exchange rate of around 197, and the US dollar (USD) demand backlog to persist. 

    • The risk to an orderly devaluation process later this year comes from the rapid decline in FX reserves (USD 30.0bn on a 30-day moving average basis on 20 March) associated with the current FX stance. 

    • Furthermore, fiscal and external fundamentals are likely to remain under  pressure given the much lower oil price, even though we expect it to recover in H2-2015.