Financial analysts have forecast a short to medium term stability in the exchange rate of the local currency to the United States dollar.

Analysts at FSDH Securities, in a report released to our correspondent on Tuesday, said the naira would be firm for a while as a result of the country’s increased foreign exchange earnings.

The report added, “We expect government securities maturities of about N171.83bn to come into the system this week. However, we also anticipate withdrawals by the Nigerian National Petroleum Corporation from the deposit money banks. This is expected to reduce the level of liquidity in the system consequently, interbank rates may remain stable.”

The money market was relatively stable last week as a result of lingering effect of statutory allocation disbursed a fortnight ago and government maturities repaid during the week. Consequently, inter-bank rates closed marginally lower in the shorter end of the market to end the week.

At the foreign exchange auction held last Wednesday, the CBN offered a total of $200m, while total sale stood at $177.99m.

The total amount of foreign exchange sold last week declined by 60.45 per cent to $177.99m over the $450m sold in the preceding week. Also, total amount offered during the week was down by 55.56 per cent from $450m to $200m.

Meanwhile, the analysts pointed out that there might be food crisis in the country in the short term.

The report said, “FSDH Research is of the opinion that the recent flooding in some parts of Nigeria, which damaged a lot of farm lands, combined with the current global food situation, may adversely impact food supply in Nigeria in the short run. This shortage may lead to sharp increase in food prices, except the Federal Government is able to meet the shortfall from its strategic food reserves.”

The Food and Agriculture Organisation Food Index had risen by 1.4 per cent in September to 216 points, from 213 points in August. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. The increase in the Index, which comes after two months of stability, reflected a spike in the international prices of dairy products, meat products and more moderate rise in cereals.

Source: Punch (written By Ademola Alawiye)