Given the additional clarity on the official acceptance of old naira notes, analysts say the currency is expected to weaken against the dollar.
Analysts from AXA Finance however added that, this is likely to happen only gradually, given that the central bank has already mopped up a sizeable portion of the old notes in preparation for replacement with new ones.
The Naira appreciated against the dollar, trading at 731 from 735 at last week’s close, as the shortage of available local currency notes continues to create an artificial shield against the dollar in the unofficial market.
Nigeria’s central bank this week said it would extend its notes exchange deadline until the end of the year, in line with an order from the Supreme Court.
Putting old notes back into circulation is intended to ease the cash crunch, which has put a strain on business transactions nationwide.
The central bank also introduced new open banking guidelines this week in a bid to boost innovation and competition and improve access to financial services.
Given the additional clarity on the official acceptance of old Naira notes, we expect to see the currency weaken against the dollar.
However, this is likely to happen only gradually, given that the central bank has already mopped up a sizeable portion of the old notes in preparation for replacement with new ones.
