Analysts See Naira Nearing N1,000/$ in 2024 as Access, GTB, Others Get New Interest Rate
- A new economic outlook by FBNQuest has predicted that the naira will close at N1,317/$ by year-end against what it is currently trading at
- According to the report, domestic pricing will continue to suffer as a result of increased transportation expenses and other issues
- The report also expects that the deregulation of the downstream and the FX crisis will further push up the rate of inflation
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The FBNQuest Research Economic Outlook study for 2024 has projected considerable fluctuations in the exchange rate, which would culminate in a year-end rate of N1,317/$ due to unpredictability in liquidity inflow.
Source: UGC
Legit.ng reported that the naira weakened to N1,615.94/$ in the official foreign exchange market on Tuesday, February 27, 2024.
Inferring from this, it means the naira would have gained almost N300/$ in the official market by year-end should the naira go in the direction of the analysis.
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The analysis, as cited in a Guardian report, anticipates that increased transportation expenses and ongoing insecurity brought on by recurrent bandit assaults on farmers in food-producing regions would continue to put pressure on domestic pricing.
The report also predicted that the deregulation of the downstream and the FX crisis will have a transmission impact that will push up all of the inflation basket's fundamental components.
According to Tunde Abidoye, head of equity research at FBNQuest, the government's unwavering commitment to policy reforms holds out hope for the economy despite the numerous challenges it faces, including slow GDP growth, high inflation, and pressure on the value of the naira.
On fiscal front
Regarding the budget, Abioye stated that the planned tax reform is expected to gradually increase non-oil revenue from under 5% of GDP to 18%.
According to him, this calls for deliberate policy changes, coordinated efforts to improve tax compliance, and encouragement of investments, particularly at the base level, to boost the sustainability and productivity of businesses.
Abioye added that one major barrier to meeting income expectations was Nigeria's meagre oil output, which is estimated to be about 1.3 million barrels per day, excluding condensates.
He added that there is an anticipated reduction in oil output due to the problem of crude oil theft and pipeline damage in the Niger Delta.
He referenced the projection that sees the Bonny Light average $72 per barrel and reach an end-of-year level of $76 per barrel, adding that the possibility of upside risk due to geopolitical concerns might be good for prices.
What analyst said
According to Charles Abuede, a financial analyst, said the movement of the naira is subjective and can be based on certain assumptions and expectations.
He however added that this does not mean to say N1,317/dollar predicted is not achievable.
He said that the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the fx market
He said,
"One thing is major and should be dealt with and that is the crude oil production. If Nigeria can address insecurity and terrorism concerns, oil theft and pipeline vandalism, we can begin to see an increase in our crude oil production to above 2mbpd or even close to 2.5mbpd to aid the increase in fx receipt.
"Also, when the CBN takes seriously the mandate of liquidity injection into the system to ensure fx stability and availability, we will see positive movement and gradual appreciation in the naira value.
"I see naira closer to N1000 in 2024 if the authorities address the front burning issues in the fx market."
Meanwhile, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) recently increased the Monetary Policy Rate (MPR) from 18.75% to 22.75%, a four hundred basis points increase.
Agusto & Co predicts naira/dollar convergence rate
Legit.ng reported that despite Nigeria's ongoing foreign exchange crisis, Agusto & Co had given an optimistic projection for Nigeria's naira/dollar exchange rate.
The pan-African credit rating agency forecast that the exchange rate could converge at N1100/$1 at the official market at the end of 2024.
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Source: Legit.ng
