A recent survey by the Central Bank of Nigeria (CBN) indicates a bleak outlook for the naira, with businesses predicting further depreciation before a potential recovery in late 2024 or early 2025. Despite the naira's nearly 70% drop in value this year, many firms remain cautiously optimistic about their overall business prospects.
Naira Depreciation Forecast
The CBN's Business Expectation Survey, which involved over 1,600 enterprises, revealed that respondents expect the naira to lose more ground in the coming months, specifically in July and August. However, they foresee a reversal starting in late December 2024, projecting a six-month appreciation trend. This comes in the wake of significant foreign exchange interventions by the CBN, which have yet to stabilize the currency, as evidenced by its record low of NGN1,640 per dollar in July.
Inflation and Social Unrest
The naira's depreciation has exacerbated inflation, which surged to 34.19% in June, leading to widespread protests and reported fatalities. Many businesses perceive the inflation rate as extremely high, contributing to a challenging economic environment.
Positive Business Outlook Amid Challenges
Despite the pessimism regarding the naira, the survey reveals a positive outlook for business activities in the upcoming month, particularly in the agriculture sector, followed by industry and services. Respondents also identified major challenges, including Nigeria's insecurity, high interest rates, and inadequate power supply.
What are your thoughts on the CBN's survey findings? Share your insights below!
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