Jubilation as Prices of Rice, Sugar, Flour Others Finally Fall in Markets, Experts React
- Analysts at Financial Derivatives have hinted at new prices of commodities sold in markets
- This is on the back of the recovery of the naira to N1,260 to the dollar across all FX markets
- Analysts believe that there will be a further moderation in commodity prices as the naira sustains recovery
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Financial Derivatives Company Limited researchers have noted that several domestic commodity prices are steadily declining due to the naira's recovery in relation to the dollar and other major currencies.
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The managing director of Financial Derivatives Company Limited, Bismarck Rewane, stated this in an email report sent to investors over the weekend.
Rewane said the naira had recovered to N1,260/$ and N1,125/$ at both the official and parallel markets.
The cost of food declines
As was generally anticipated, The Nation reported that the costs of some food items have started to rise with the steady appreciation of the naira.
Rewane said:
“Notably, prices of some commodities like rice (50kg) decreased by 5.26 per cent to N90,000, sugar fell by 5.88 per cent to N80,000/bag, flour experienced a decline of 7.81 per cent to N59,000/bag, and noodles (carton) witnessed a significant decrease of 15.22 per cent to N7,800/carton.”
He clarified that pricing will probably reflect the appreciation of the naira as more companies start to stock up on inventories.
Rewane added:
“In the short term, we anticipate further moderation in commodity prices as the naira sustains recovery due to improved forex supply. Consequently, inflationary pressure is expected to slow in the coming months.”
The naira continues to gain
Since the naira touched an all-time low of N1,915/$ in February at the parallel market, the Central Bank of Nigeria (CBN)'s recent foreign exchange (FX) market sanitisation policy has put the currency on a steady route to recovery.
The increase in foreign exchange inflows and the CBN's selling of dollars to Bureau de Change (BDCs) contributed to the exchange rate recovery.
The amount invested in foreign portfolios has increased to $2.3 billion in the first two months of 2024.
According to Rewane, clearing the apex bank's $7 billion in certified foreign exchange backlog was a significant accomplishment.
With this accomplishment, the CBN governor, Olayemi Cardoso, keeps his pledge to deal with the backlog. By reducing the backlog, CBN is advancing its continued policy objectives to stabilise the currency rate, reduce import inflation, and increase economic confidence.
He said:
“The recent clearance of the FX backlog by the CBN marks a pivotal moment for the nation’s economy, carrying profound implications for several key macroeconomic indicate."
Dr. Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), observed that the market's continuous evolution demonstrated its readiness to correct itself with a realistic price discovery as the naira keeps appreciating on a global scale thanks to the CBN's policies encouraging more foreign exchange inflows.
“We applaud the CBN management for the reconsideration and reinstatement of the BDC sub-sector as the third leg of the forex market to put hoarding and speculation under check, and we have seen faster results than expected,” Gwadabe said.
Rice price hits N77,000 per bag
Legit.ng reported earlier that Nigerians in their millions were now adopting severe cost-cutting measures to cope with the hardship caused by the astronomical rise in the country's goods and services price.
This followed reports that the price for a bag of rice was N77,000.
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Source: Legit.ng
