The Central Bank of Nigeria (CBN) has revealed in its latest Business Expectations Survey Report for December that the naira will likely shed value further in January next year as the Nigerian economy grapples with its second recession in four years.
The local currency has been under increasing pressure recently, touching a record low on 30th November when it changed hands at N500 to a dollar at the black market.
It has been oscillating between N460 and N470 to a dollar since that time, and closed at N465 on Thursday, according to abokiFX.com, which collates exchange rates from street traders.
‘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,’ the CBN document noted.
According to the CBN report, interest rate might rise steadily from September through the first half of 2021.
The study, which was carried out by the CBN statistics unit virtually from December 7 to 11 by sampling the views of 1,050 businesses nationwide, had a 91.3 per cent response rate and covered the manufacturing, construction, agriculture/services and wholesale/retail trade sectors.
“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,” the report said.
Respondent firms in the CBN survey were pessimistic of the macro-economy but expressed a positive view on volume of business activities, average capacity utilisation financial condition (working capital) and the volume of total order.
They listed competition, harsh economic ambience, poor power supply, competition, financial problems, high interest rates, access to credit, unclear economic regulations, dearth of equipment, low demand, labour problems and lack of material input as major factors limiting business activities in December.