- The continued decline of the naira against major currencies in Nigeria is a cause for concern to the government and Nigerians in general
- Agusto & Co has predicted that the forex crisis in Nigeria may eventually stabilise by the end of the year
- The agency noted that it expects the CBN to raise MPR by around 19 per cent, given the need to manage inflation
Legit.ng journalist Victor Enengedi has over a decade’s experience covering Energy, MSMEs, Technology and the stock market.
Despite the ongoing foreign exchange crisis in Nigeria, Agusto & Co has given an optimistic projection for Nigeria’s naira/dollar exchange rate.
The Pan-African credit rating agency forecasts that the exchange rate could converge at N1100/$1 at the official market at the end of 2024.
The agency gave this prediction in its monthly newsletter for January titled, “2024: A year of reckoning, turning points and balancing acts”.
Source: UGC
Data from FMDQ shows that on Friday, February 23, the naira depreciated against the US dollar at NAFEM by about 6%, or N94.19, to close at N1,665.50/$1, compared to the N1,571.31/$1 rate the previous day.
The report covered several sectors of the economy, including GDP growth, inflation rate, and the forex crisis, which is one of the most challenging issues in the country at the moment.
Agusto & Co stated that despite expectations of higher export earnings from improved oil production and still high oil prices, there is a risk that the naira may depreciate further.
It, however, noted that capital inflows would likely remain constrained on low investor confidence as forex illiquidity lingers.
The agency said:
“The CBN has committed to intermittently boost forex liquidity and we believe that the recent receipt of a $2.25 billion forex support facility from Afreximbank, anticipated inflows from the World Bank and proceeds from dividend securitisations from the NLNG will support in this regard.”
“This amount represents 12.5 per cent of the estimated $18 billion inflow expected from various external sources. We believe that achieving 50 per cent of this target in 2024 and maintaining crude oil output at 1.5mbpd will be crucial in restoring FX stability in the near term.”
It added that the apex bank reportedly redeemed a portion of the matured currency forward liabilities amounting to almost $2 billion in the last three months of 2023.
This is in addition to a payment of $61.64 million to foreign airlines, who were owed an estimated $700 at the end of November 2023.
According to the agency, a major risk to the forecast is the threat of rapid currency depreciation and the CBN’s reversion to heavier management of the exchange rate to maintain it.
Moghalu speaks on solution to naira’s fall
In related news, Legit.ng reported that Kingsley Moghalu, the ex-deputy governor of the CBN, has outlined a strategy for the potential recovery of the naira.
In his address during the 29th annual Nigerian Economic Summit held in Abuja on Tuesday, October 24, 2023, Moghalu emphasised that the key to resolving the naira’s issues lies in transforming the Nigerian economy into a productive and export-oriented one.
The former presidential candidate stressed Nigeria’s need to formulate a comprehensive and practical plan to enhance the naira’s stability.
Source: Legit.ng
