The Bank of America has predicted a 20 per cent devaluation of the naira post-2023 general elections.

The global lender said the local currency unit will weaken further next year as its exchange rate to the dollar is well above fair value.

The Economist, Bank of America Sub-Saharan Africa, Tatonga Rusike, listed three indicators that would crumble the naira.

First is the widely-used black-market rate, the central bank’s real effective exchange rate, and “our own currency fair value analysis”, indicating that the naira is 20 per cent overvalued.

“We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD,” Rusike said in a note to clients.

While the naira will come under increasing pressure “due to limited government external borrowing,” devaluation is unlikely to happen until after the February 2023 presidential elections, the bank said.

SOURCE: THENATION