June 21, (THEWILL) – The Naira resumed its plunge on the I&E window Wednesday, closing at N763.17/$ according to data on the FMDQ website.
This represents a 1.4 percent depreciation from the gain of Tuesday when it closed at N756.61/$ and recorded the historic convergence with the parallel market’s N750/$.
While the floating of the Naira has been applauded in many quarters as against the CBN-controlled rate prior to the June 14 ‘disruption’ date, analysts predict a sharp rise in inflation rate from the all-time high of 12.42 percent recorded in May 2023.
KPMG Services had projected a 30 percent rise in inflation from June, 2023 arising from the various policy measures such as the removal of subsidies on petrol and electricity and the floating of the Naira.
“We are just accumulating large quantities of paper money with little productivity to back it up as the Naira loses value at an alarming rate,” said Mike Obodoechi, a finance analyst.
According to Dr Boniface Chizea, a retired banker and top Economist, the development in the fiscal ecosystem will trigger a new phase of economic performance that cannot be accurately predicted at the moment.
“Therefore, all calculations of familiar indices; budget outcome, debt to GDP, debt to revenue, tax to GDP ratio remain uncertain until the situation settles.
“We hope that the anticipated massive inflow in foreign exchange with related Direct Foreign Investments will materialise to cushion the inflationary effect of sudden price increases.
“Other related issues that will impact the economy will be tackled, particularly insecurity which has negatively impacted the agriculture supply chain,” Chizea said in his piece on the Nigerian economy and consequences of floating the Naira, which he made available to THEWILL.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
