CBN Predicts Further Depreciation of the Naira in January 2021

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Obiajulu Joel Nwolu

Obiajulu Joel Nwolu is an established writer at africannewstoday.com. He is passionate about African affairs. He loves writing about interesting facts relating to the African continent and enjoys sharing his knowledge with others.

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The Central Bank of Nigeria has said that a survey conducted by its Statistics Department showed that the naira is projected to further depreciate in January next year.

According to the report titled, ‘December 2020 Business Expectations Survey Report’, there might also be a steady rise in the interest rate from December till the next six months, Punch reports.

Nigeria’s currency fell to its lowest on November 30, 2020, when it exchanged for N500/$1. Since then, the dollar has been lingering between N460 and N470. As of Friday, however, one dollar exchanged for N465 in the parallel market.

Recall that the Nigerian economy fell into its second recession in five years on November 21, 2020. Reports say the recession is the worst in 36 years, according to the data obtained from the World Bank. The Federal Government and some economists had expressed optimism that the country would exit the recession in 2021.

The CBN in the 11-page survey report said it conducted the survey online from December 7 to 11, with a sample size of 1,050 businesses nationwide.

It added that the sample covered the agriculture/services, manufacturing, wholesale/retail trade and construction sectors.

The report read in part, “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 the 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.”