Financial Expert Predicts Naira Could Close 2024 Between N1,500 and N1,800 Per Dollar
- The continued decline of the naira against major currencies in Nigeria is a cause for concern, as highlighted by Adetilewa Adebajo
- Adebajo has predicted that forex scarcity may be sustained throughout the year, resulting in severe naira depreciation
- This depreciation not only impacts businesses reliant on foreign exchange but also raises broader economic uncertainties
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
The Chief Executive Officer of Corporate Finance Group (CFG) Advisory has expressed concerns about the ongoing foreign exchange (FX) crisis.
According to Adetilewa Adebajo, there is a likelihood that the naira will conclude the year within the range of N1,500 to N1,800 against the dollar.
Source: UGC
This follows the ongoing decline of the naira against major currencies, which has become a cause of concern for Nigerians and the government.
On Friday, January 12, the naira lost about N15.75, closing at N890.54 per dollar as against the N874.94 it traded the day before, according to the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Sustained scarcity of Forex at NAFEM
According to a Guardian report, Adebajo advised Nigerians to brace themselves for an anticipated 18-month economic recovery period.
During this time, he foresees a persistently high interest rate environment and a sustained scarcity of FX at NAFEM, albeit with some relief from the parallel market.
Emphasizing the importance of value preservation, he recommended consistent hedging strategies by directing excess liquidity and profits towards assets that possess enduring value.
He stated that the current state of Nigeria's indebtedness is unmanageable, as the $130 billion debt load is being sustained by 95% of the revenue, surpassing both recurrent and capital expenditure.
Regarding the business outlook of the group, he provided a benchmark suggestion for optimal business operations, aiming to secure year-end value retention against the Naira/dollar exchange rate within the range of 1,500 and 1,800, contingent on the specific sector of the economy.
Additionally, he raised concerns about the implications of the $10 billion deficit in the 2024 budget, prompting inquiries into whether Nigeria is potentially following the default trajectory observed in countries like Ghana, Zambia, and Ethiopia.
Adebajo recommended immediately restructuring domestic and external debt as part of the ongoing economic reforms, emphasizing the need to prevent potential imposition by the Paris and London clubs.
Despite this, he asserted that the economy's underlying fundamentals are robust, highlighting that effective economic leadership is the key missing element for realizing its full potential and fostering economic growth.
He expressed optimism about the heightened expectations associated with the newly appointed and highly-regarded economic management team.
Some analysts have observed that the Central Bank of Nigeria's clearing of backlog forex appears to be releasing the pressure on the naira and boosting investors' confidence.
Moghalu speaks on solution to naira's free 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 emphasized 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.
PAY ATTENTION: Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Source: Legit.ng
