Analysts see the devaluation of the naira as crucial to stabilising the local currency and winning investors' confidence.
JP Morgan has said that the official naira exchange rate to the US dollar would steady in the months ahead.
But the multinational financial services firm expects the local currency to jump to at least the rate on the black market following initial pressure from a monetary policy reset.
Nigeria weakened its currency by more than one-third on Wednesday on the official market in a move to converge its numerous exchange rates around that used on the parallel market.
Analysts see the push as crucial to stabilising the naira and winning investors' confidence.
It forms part of the sweeping reforms President Bola Tinubu is pursuing to strengthen the creaky monetary policy framework of Africa's biggest economy, which saw the spread between the two rates widen by around 60 per cent under the previous administration.
Until the latest policy shift, the government closely controlled the artificially strong official rate by rationing the dollar to strengthen the foreign reserves, forcing end users to flock to the black market, where FX was more available but at a much higher rate.
JP Morgan projects in a Thursday commentary, seen by PREMIUM TIMES, the spot rate, which stood at N702.19 at market close, to soar to N750 or higher in the short term.
"We suspect yesterday's (Wednesday's) FX adjustment is not a one-time devaluation, but rather a shift back towards one market exchange rate and flexible FX policy," analysts at the New York-based financial services firm said.
"Furthermore, a re-engineering of monetary policy to harmonize market rates with the policy rate could follow, while reports suggesting the possible privatization of oil refineries could bode well for fiscal accounts."
On Monday, the newly appointed special adviser to the president on monetary policy, Wale Edun told Bloomberg harmonisation "would have to be done within a quarter as rather than within a year."
JP Morgan envisages the devaluation will have mild implications for headline inflation as the bulk of Nigeria's informal economy gets dollars "at the much higher parallel market rate."
