PROJECTED A REDUCTION IN PRICES SOMETIME THIS YEAR
Written by Adeola Ibrahim on April 22, 2024
This year the naira plunged to an all-time low of 1,800/$ on the black market in February.
In its attempt to save the naira, the CBN under the leadership of Governor Olayemi Cardoso raised interest rates by a combined record 600 basis points in its two meetings in February and March.
The CBN has also stepped up intervention in the FX market with sales at both the official market and to Bureau de Change operators who sell dollars on the streets.
Analysts have said the recent stability seen in the foreign exchange market coupled with the appreciation of the naira will moderate the country’s inflation rate that surged in recent months.
Umaru Mustapha, a research analyst at CSL Stockbrokers Limited, said that the market has moved from high volatility to some level of stability in comparison to the past. He also projected a reduction in prices sometime this year, because of expected reduction in imported inflation.
Nigeria’s inflation rate improved from the 43 percent all time low, to being 34 percent stronger, and further to a 33.2 percent in mid-March.
In the past week, the naira appreciated to a seven-month high on the black market, trading for 1,000 against the dollar.
On June 14, 2023, the Central Bank of Nigeria (CBN) announced the unification of all segments of the foreign exchange market – replacing the old regime of multiple exchange rates.
It reintroduced the willing buyer, willing seller market model to trading at the Investors and Exporters (I&E) window, in a move towards liberalising the market. The I&E window already had a lower naira rate than the CBN’s official rate.
At the end of the year, the naira plunged 55 percent to 1,043 per dollar on the official market, making it the world’s worst performer after the Lebanese pound and the Argentine peso among 151 currencies, according to Bloomberg. In the black market, the currency closed at 1,208/$.
