Naira to End 2024 at 1,621.7/$, What This Means for Nigeria’s Economy

The Nigerian Naira is predicted to end 2024 at 1,621.7 to the US dollar, indicating continued pressure on the currency. This forecast is a downgrade from the previous prediction of 1,571.7 Naira to the dollar, according to Stears macroeconomic outlook for Nigeria.

The Naira has been volatile despite interventions by the Central Bank of Nigeria (CBN) to stabilize it. The currency’s volatility can be attributed to various factors, including inflation, dollar demand, and fluctuations in global oil prices. Nigeria’s inflation rate has been on the rise, reaching 23.12% in August 2024, which has eroded the purchasing power of the Naira and led to a decrease in its value.

The demand for dollars in Nigeria remains high, driven by imports and foreign investment. This demand puts pressure on the Naira, causing it to depreciate. Furthermore, Nigeria’s economy is heavily reliant on oil exports, making it vulnerable to fluctuations in global oil prices.

In October, the Naira depreciated sharply by 8%, eroding its September gains and displacing it from the best-performing currency to the worst month-on-month. The parallel market also saw a significant depreciation, with the Naira hitting a record low of 1,750 to the dollar.

The CBN has implemented various measures to stabilize the Naira, including foreign exchange restrictions and interest rate adjustments. The bank has also intervened in the foreign exchange market to provide liquidity and stabilize the currency. However, despite these efforts, the Naira is expected to remain under pressure in the remaining months of 2024.

Persistent dollar demand, inflationary pressures, and global economic uncertainty are expected to continue challenging the Naira. The demand for dollars is expected to remain high, driven by imports and foreign investment, while Nigeria’s inflation rate is expected to remain high, eroding the purchasing power of the Naira.

As the global economic landscape continues to evolve, it is essential for investors, policymakers, and individuals to closely monitor the Naira’s performance and adjust their strategies accordingly. Diversifying investments, monitoring the CBN’s monetary policy decisions, and developing strategies to manage inflation are crucial steps to mitigate the impact of the Naira’s volatility.

In conclusion, the Nigerian Naira is expected to end 2024 at 1,621.7 to the US dollar, indicating continued pressure on the currency. While the CBN’s efforts have had some impact, the currency remains vulnerable to various factors, and its performance will be closely watched in the coming months.