Standard Chartered Bank sees the naira trading at N685 per US dollar by the end of June as Nigeria quickens the pace of implementing reforms needed to fix its foreign exchange market.

“We now forecast USD-NGN at 685.00 at the end Q2-2023 (from 480 previously), rising to 720 in Q3-2023 (520 prior), before appreciating thereafter as the market stabilises,” Razia Khan, head of research, Africa & Middle East and Samir Gadio, head of Africa strategy both at Standard Chartered bank said in a June 14 note to investors.

The Central Bank of Nigeria (CBN) quoted the naira at 585 per US dollar on Thursday, 12 percent higher than the closing rate of N664 the previous day. The apex bank had on Wednesday scrapped its hard currency peg and allowed banks to freely set market rates for the sale of foreign exchange.

Investors cheered the move with the stock market rising for a second straight day after hitting a 15-year high only the day before, following the suspension of CBN governor Godwin Emefiele whose unorthodox monetary policies had drained investor confidence.

Nigeria’s bold move towards achieving a unified exchange rate after years of a multiple exchange rate practice that spooked investors and drew the criticism of economists is the latest of a list of reforms by new President Bola Tinubu who has also scrapped a costly petrol subsidy program.

“Inflation is likely to recede following initial subsidy reforms and changes to monetary policy, while offshore investor interest in LCY debt might eventually return, and a combination of asset sales and other FDI could further stabilise FX reserves,” Khan and Gadio said.