Naira to fall further in January – CBN
The Central Bank of Nigeria has disclosed that the naira is expected to depreciate further in January 2021 according to the report of the survey carried out by its Statistics Department.
According to the ‘December 2020 Business Expectations Survey Report’, there might also be a steady rise in interest rate from December till the next six months.
In recent weeks, the naira experienced a sharp fall, reaching its lowest on November 30, 2020, when it exchanged for N500/$1. The dollar has since then been hovering between N460 and N470. In the parallel market on Friday, one dollar however exchanged for N465.
The survey according to the CBN report, was conducted online from December 7 to 11, with a sample size of 1,050 businesses nationwide. A response rate of 91.3 per cent was achieved and that the sample covered the agriculture/services, manufacturing, wholesale/retail trade and construction sectors.
It added that the respondent firms were made up of small, medium and large corporations covering both import-oriented and export-oriented businesses.
Part of the report says, “Respondent firms expect the naira to depreciate in the current month and next month but appreciate in the next two months and the next six months.
“Inflation level is expected to rise in the next six and 12 months as firms expect the average inflation rate in the next six months and the next 12 months to stand at 13.24 and 14.51 per cent, while borrowing rate is expected to rise in the current month, next month, next two months and the next six months with indices of 19.2, 14.9, 14.7 and 14.3 points.”
There was pessimism on the macro economy by respondent firms, while their outlook on the volume of business activities, average capacity utilisation, the volume of total order and financial condition (working capital) were positive.
Insufficient power supply, unfavourable economic climate, competition, high interest rates, unclear economic laws, financial problems, unfavourable political climate, access to credit, insufficient demand, lack of equipment, lack of materials input, and labour problems were identified by respondent firms as major factors constraining business activities in December 2020.