A Central Bank of Nigeria survey shows that businesses expect the naira to weaken further before rebounding in late 2024 or early 2025, despite ongoing depreciation and inflation concerns.
Bollywood Fever: A recent survey conducted by the Central Bank of Nigeria (CBN) has revealed that Nigerian businesses are bracing for further depreciation of the naira before the currency begins to strengthen in late 2024 or early 2025.
Despite the CBN’s efforts to stabilize the naira by injecting millions of dollars into the foreign exchange market, the local currency has continued to decline, fueling inflation and sparking widespread protests.
The CBN’s Business Expectation Survey, which included responses from over 1,600 Nigerian enterprises, highlighted that most businesses anticipate the naira’s value to weaken in the short term, with expectations of depreciation in July and August and continuing for the next three months.
However, respondents expressed optimism that the naira would start to appreciate around late December 2024 or early 2025, with this upward trend expected to persist for at least six months.
Since the survey was conducted between July 15 and 19, the naira has continued its downward trajectory, hitting an all-time low of NGN1,640 per U.S. dollar in July.
This decline has occurred despite the CBN’s significant interventions, including selling U.S. dollars at discounted rates, which failed to halt the naira’s depreciation.
The ongoing depreciation of the naira has exacerbated Nigeria’s inflation rate, which soared to 34.19% in June, leading to a sharp decline in living standards for many Nigerians.
The resulting economic strain has triggered protests, with reports of 17 deaths as a result of clashes between protesters and authorities.
Despite the challenging economic environment, the survey found that many businesses remain cautiously optimistic about the future.
Respondents, particularly those from large firms, maintained a positive overall business outlook, citing expected improvements in business activity and employment prospects in the coming months.
“The positive outlook in the volume of business activities of the firms in the next month implied improved prospects for employment in the same period.
The sector with the highest prospect for employment is the agriculture sector, followed by the industry and services sectors,” the survey report noted.
However, the survey also highlighted several key challenges that continue to hinder business operations in Nigeria.
Insecurity was cited as the primary concern by many respondents, alongside other significant obstacles such as high interest rates, insufficient power supply, and high or multiple taxes.
As Nigerian businesses navigate these turbulent times, their cautious optimism reflects a broader hope that the naira’s fortunes will eventually turn around, stabilizing the economy and improving conditions for growth and development.
The anticipated appreciation of the naira in 2025 offers a glimmer of hope amidst the current economic challenges.
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