The Nigerian naira is expected to fall next week as the country switches to a flexible, market driven exchange rate policy.
The central bank said on Wednesday it would abandon its 16-month fixed exchange rate policy. "We are expecting an initial wide depreciation of the naira at the official window, but the rate could stabilise at around the present black market rate of 370 depending on how much dollars the central bank will be willing to push into the market," said a senior trader.
At 0930 GMT, commercial banks quoted the shilling at 3,344/3,354, little changed from last Wednesday's close of 3,340/3,350. Last Thursday was a national holiday in Uganda and markets were closed. "The one week repo and also low interest in the dollar should help give (the shilling) considerable support," said a trader at a leading commercial bank.