High demand for foreign exchange during Christmas will worsen the nairaâs depreciation.
This is according to a projection by Meristem Securities Limited in its Inflation Report released on Tuesday, November 19, 2024.
In the report, Meristem expressed worry that the forex demand during Christmas would exacerbate the nairaâs woes before the inflation rate.
The Nigerian currency has been in a freefall recently, hitting its lowest on Monday, November 18, 2024, when it exchanged for N1690.32 per dollar.
According to the report, food prices are expected to rise further in the near term due to increased transportation costs and consumer demand ahead of the festive season.
The report disclosed that further upward pressure on the core index will be caused by rising transportation from elevated fuel prices.
The report said:
Many projections show that the naira will fall further on or before December.
Punch reports that the local currency performed poorly this November in all markets despite Nigeriaâs foreign reserves rising to their highest levels in two years.
A recent BMI analysis said the naira is expected to depreciate to N1,993 per dollar by 2028.
The Business Expectations Survey of the Central Bank of Nigeria (CBN) showed that respondents expect the naira to fall in the current month and the next three months but rise in the next six months.
Bismarck Rewane, the managing director of Financial Derivative Company, projected that the naira would rise in January 2025 relative to its current trading position.
Rewane mentioned the FX rate as the main reason for inflation in Nigeria, stating that a partial rebound of the local currency would reduce inflation and curb money supply issues in the money market.
Janet Ogochukuwu, a senior banker and economist, corroborated the predictions, stating that they are familiar as the CBN has remained resolute about not intervening in the FX markets.
TimesNow.com.ng earlier reported that Veriv Africa, a data insights, research, and advisory firm, predicted that the naira could exchange at N1,930 – N2000 per dollar in a worst-case scenario in 2025.
The research firm disclosed this in its macroeconomic outlook, released over the weekend in Abuja.
Veriv Africa stated that the naira is projected to trade at N1,790 per dollar in the best-case scenario.
Proofreading by James, Ojo Adakole, journalist and copy editor at TimesNow.com.ng.
Source: TimesNow.com.ng
