Ccnworldtech news acknowledged that On Sunday, the Central Bank of Nigeria (CBN) stated that a recent report revealed that in January 2021, the naira is considered to be further devalued.
According to research carried out by the Stats Bureau entitled ‘December 2020 Business Expectations Survey Report’ confirmed the naira fall, the CBN who made this known barely five days to the new year stated.
Additionally, the CBN also stated that the rate of interest could increase steadily from December until the next six months.
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The growth comes due to rising complaints about the naira’s falling value against the dollar in recent years, with its smallest fall that took place on November 30, 2020, when it traded for N500/$1.
The 11-page research study was conducted from December 7 to 11, according to the CBN, with a sample frame of 1,050 companies nationwide.
It indicated that a 91.3 percent data collection was attained and that the sample wrapped the areas of agriculture/services, production, wholesale/retail trade and development.
The apex bank also confirmed that the respondent companies were composed of small, medium and large enterprises, encompassing both import and export-oriented enterprises.
“Respondent companies expect the naira to be devalued in the current month and next month, but to appreciate in the next two months and the next six months,” the report read in part.
”The rate of inflation is expected to rise in the next six and 12 months, as firms hope for the average inflation rate to rise to 13.24 and 14.51 percent in the next six months and 12 months, while the borrowing rate is likely to rise to 19.2, 14.9 14.7 and 14.13 percent in the current month, next month next two month and next six months.”
The CBN confirmed that the survey suggests that respondents were displeased due to the government’s poor management of inflation.
“Respondent firms exhibited unhappiness with the government’s inflation management, with a negative net satisfaction index of -33.5 in December 2020,” it said.
Making a comment on the study’s findings, Sam Nzekwe, former president of the Association of National Accountants of Nigeria, stated that the country’s over-reliance on oil would continue to have a negative impact on its economy.
“Oil didn’t come up; we’re not yet aware of what is going to happen in January and February”, He stated. When developed countries use solar electricity for vehicles,
it means that most of the developed economies that request for our oil may not demand as much because they adjust the focus from oil to electricity. In January, the economy may not recover and inflation is also on the rise.
”Also, there is the challenge of insecurity; food decrease will occur because most farmers are not going to farm mostly, because of banditry and abductions, and inflation will continue to increase when there is a shortage of food.”
Likewise, Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industry, said the macroeconomic fundamentals, structural factors and policy making would decide the rate of exchange and the end result of inflation in 2021.
“For example, an increases in the cost and output of oil could alter the ideology concerning the exchange rate and our foreign exchange reserves,” he added. It is hard to predict some of these variables.
The key drivers of inflation are the exchange rate, the cost of transport, the impact of security on agricultural production, the seasonal patterns of harvests and the cost of energy, and several others.’
“By January, it is unlikely that much will change in these variables.”
On the way forward, Yusuf stated, “We need to resolve the contributing factors of price increases as illustrated in order to fix the issue.”
For his part, the President of Nigeria’s Chartered Insurance Institute, Muftau Oyegunle, voiced concerns that the country’s high inflation could be addressed by the rising tensions plaguing the North and thus hampering the food production and supply.
“Oyegunle, who emphasized on the reservations about the CBN survey that the naira would further fall in value, said, “Essentially,
one thing that is true is that Nigerians overseas are the ones who support this financial system through money transfers, even before Nigerians recognized the position that foreign money played in the economy.
“Nigerian overseas cash transfers are more than what we earn from petroleum products, and this varies significantly in the value of the naira.”
