Nigeria’s official exchange rate to hit N1,068/$ by 2025 – EIU



Nigeria’s official exchange rate is projected to weaken to N1,068.3/$ by 2025, according to a new report by the Economist Intelligence Unit (EIU).

In its new country report for Nigeria, the EIU noted that there would be continued currency losses due to the large size of the parallel market and the low foreign exchange reserve of the country.

The report read:

“We have revised our exchange-rate forecast to front-load a larger devaluation in 2025, to reflect a widening gap between the official and parallel-market exchange rates. We expect another attempt at exchange-rate convergence that year, meaning a larger correction.

“We have adjusted our average exchange-rate forecast for that year to N1,068.3:US$1, from N914.4:US$1 previously. As our forecast for continued currency losses over time has not changed, the projected rate is also now weaker for later years.

“A larger devaluation will have limited pass-through, given the size of the parallel market, but our forecast for average inflation in 2025 has been revised up by two percentage points, from 15.1% to 17.1%.”

Nigeria’s forex scarcity

Nigeria has been grappling with foreign exchange illiquidity, which has made the country unable to clear off its forex backlog, further worsening the value of its currency.

President Bola Tinubu recently promised to settle the approximately $7 billion in unpaid foreign exchange commitments owing to banks through foreign currency forward contracts.

After recognising the difficulties experienced by the business sector in the financial markets, Tinubu promised more foreign exchange liquidity in his statement at the 29th Nigerian Economic Summit in Abuja.

Sources later verified that the CBN has begun making good on its pledge to settle some of its foreign exchange (FX) liabilities with some institutions, including Citibank, Stanbic IBTC, and Standard Chartered.

The FX backlog, weakening investor confidence in the Nigerian economy, is on the verge of being reduced due to this development.

However, difficulties remained in efficiently disbursing the FX despite the CBN’s efforts to clear the forex backlog and relieve pressure.

Foreign airlines recently disclosed that about 90 per cent of their $783m trapped funds were yet to be paid.

It was barely surprising that the naira fell to a new low on Thursday, closing at N996.75 per dollar in the official market and N1090 per dollar in the parallel market despite the CBN’s recent move to clear some of its FX backlog. 

Highlighting on the Nigeria’s forex illiquidity, the EIU said:

“After brief consolidation in June, a wide (35%) spread between the official and parallel-market exchange rates has re-emerged, reflecting an ongoing reluctance by the Central Bank of Nigeria (CBN) to allow free access to hard currency, and resulting illiquidity in the Nigerian Foreign Exchange Market (NFEM, the official window).

“Pressing harder on currency reform would therefore mean a hefty devaluation, crushing any pretence of petrol price deregulation (assuming that higher pump prices are a political red line) and stretching a fragile fiscal position.”

The country report also stated that additional demand in the formal market will be met with constrained supply due to the recent decision to eliminate import limitations on 43 imported commodities.

It went on to say that the authorities haven’t shown enough willingness to implement an orthodox monetary policy to address the issues weighing on the naira, such as severely negative short-term real interest rates.

CBN lacks firepower
According to the EIU, a currency float may not succeed over 2024-28, as the CBN “lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, valued at over US$6bn, which will keep foreign investors unnerved.”

It added that the CBN will continue to prop up the official exchange rate in the short to medium term through access restrictions, implying long lead times at the NFEM.

It noted that about one-third of the official foreign reserves of about $33 billion are tied up in derivative contracts or loans.

The EIU stated:

“Sizable devaluations are expected in 2025—or possibly sooner—causing a 38.5% loss against the US dollar over the year, to N1,142.5:US$1 at end-December. However, we do not expect lasting commitment to a market-led naira, as the CBN lacks experience of conducting monetary policy under a float.

“High inflation and a continued spread with the parallel market will leave the exchange-rate regime unstable and result in periodic devaluations. We project a rate of N1,262.1:US$1 at end-2028, with a continuous spread with the parallel market expected.”

Source: https://nairametrics.com/2023/11/10/nigerias-official-exchange-rate-to-hit-n1068-by-2025-eiu

Okay o

The way things are going right now, you have 3 options: save in dollar, buy Gold or buy land. These are the only right way to save money now. Leaving your naira in the bank is the fastest route to poverty. Every Nigerian ought to own a portion of the Federal Capital Territory. Abuja is our common heritage as Nigerian citizens.

The good thing is, Land no cost for Abuja, Na you wan buy am for Maitama. Even sef, Land no even cost for Maitama, Na you no buy am on time.

For as low as 800k, you can become a Landlord in Abuja. Don't take my word for it, you can click this LINK to see for yourself.

Where is the hope nah? And some people are here playing tribal politics with the lives of their unborn children.

Na wah

Black market go come be how much? N 3,000/$. Thank God say I be healthcare professional and I dey chop Australian dollar.

2k rather

APC have finished Nigeria kpatakpata

This forecast means the West do not have confidence in Tinubu's team and their ability to steer Nigeria's economy out of trouble waters.

Secondly, it's obvious the new CBN gov is taking care of his paddies by releasing dollars to Citibank (which he used to chair) Stanbic IBTC and Standard Chartered.

These are foreign banks who are only in Nigeria for portfolios and not real business enterprise.

The aviation sector who really needs the funds (remember Emirates and the UAE ban) and which should be priority is left unattended to and the minister there is not saying anything.

He's busy remonstrating with NLC. The manufacturing sector is also not getting anything. Not good.

While not good, at least Cardoso should have gotten some assurances from those three paddies of his on reciprocation before shelling out dollars to them from our reserve. It will be pure sabotage if that's not the case.

Lastly, while it seems as if there's a bit of convergence between official and black market rates, this high rate and negative forecast does not help Tinubu's avowed dream of a trillion dollar economy. The bigger question is if he and his team are really serious about that target or it's just another propaganda to titillate their Zombies.

Time will tell

Hehehe! So hope will not be renewed as the shege promax loading till 2025? God forbid for the beleaguered citizens of this nation.

So the EIU is betting that the CBN will eventually fold and abandon the floating rate regime. If that happens, all this pain would have been for what? Absolutely nothing?

Almost the entire write-up is a scathing vote of no confidence in the CBN leadership. Not that this should matter to the 'patriots' Tope Fasua spoke about...after all the EIU is not Nigerian and it is not a stakeholder in this country. But the message is clear.

They would soon come and tag it IPOB news and reports.

The number one import in this strange country is refined petroleum products. That's what's eating up this country's foreign exchange, year after year after year. The elephant in the room which Nigerians have been running away from is this: Why can't Nigeria refine petroleum products locally? Why?

This is November 2023. We are waiting for Dangote refinery and PHRC and the fantastic promises that were made.

We are waiting.

There was a country!


Nigeria is a time bomb waiting to explode anytime soon!

2025 ke

It's already happening as we speak

Wahala ProMax....they think say Na to dump 10billion dollars backlog, get short term results and throw owambe party online for it......we need to start manufacturing and exporting ....or manufacture and stop importing .....rather, they are still allocating millions of scarce dollars to use to purchase unnecessary luxury items . SUVs and Yacht


https://www.youtube.com/watch?v=T-E_1HkrLmc

On our way to Aso rock

https://www.youtube.com/watch?v=T-E_1HkrLmc

This News shall favour me and my family

Billionairly:
Where is the hope nah? And some people are here playing tribal politics with the lives of their unborn children.

They are clearly not very smart

Same EIU keep ranking Lagos as the second worst city in the world to live in.

They are Ibos.
They are IPOB
.

.

That will be if the president will do the right thing before then.

APC propaganda na promax

You inject $6million to deceive the gullible ones that Naira has gain it strength just for 1 or 2 weeks then 2moro, we go back to square one.

2024, not 2025.

Stop all this useless projection

We’re bleeped!!! Very bleeped.

This should be 2024 projection. Official rate is currently N1000.

I am an agbado corn-brain, but I regret voting for Thïefnubu.

It's well.

DaddyJapan:


Source: https://nairametrics.com/2023/11/10/nigerias-official-exchange-rate-to-hit-n1068-by-2025-eiu

Are you kidding me. It will be in a few weeks time, by 2025 we will all be begging Buhari to come back
Running a country like Nigeria is not a child's play. But it is good, maybe by 2027 we will make use of our brains, it will get to everyone

This is what the agbado government meant by they will shock Nigerians.
Urchins over to your defense

@Kukutente23

APC have finished Nigeria kpatakpata

nlfpmod.


@me
Swear..... did you understand what is written here?.....the only thing you know is how APC has finished Nigeria.

Renewed shege... That's what you voted for.. Enjoy am.