FX Rate to Remain Weak Till End of 2024—CBN Survey

By Adedapo Adesanya

A new report from the Central Bank of Nigeria (CBN) indicated that businesses operating in the country expect the exchange rate to remain weak for the remainder of the year.

According to the Business Expectations Survey (BES) report released by the CBN on Wednesday, despite seeing weakening trends for the local currency, they believe that the Naira is likely to appreciate in January.

The report said that the survey, which was carried out between July 15 and July 19, 2024, covered the industry, services and agriculture sectors.

According to the report, the firms expect the borrowing rate to remain high until January 2025, when it starts to cool.

Other highlights of the report are that firms expect business conditions in Nigeria to improve(optimism is driven by the opinion of respondents from the agriculture sector” and that the sector with the highest prospect for employment is the agriculture sector, followed by the industry and services sectors.

In addition, firms cited insecurity as the major factor that constrained business activity in July 2024. They also noted that other constraining factors are high interest rates, insufficient power supply, as well as high/multiple taxes.

“The overall confidence index (CI) at 0.1 index points indicates that few respondent firms expressed optimism on the macroeconomy as they expect business conditions to improve in July 2024.

“The index, however, dropped by 3.0 index points when compared to the level obtained in the previous month. “The optimism in July 2024 is driven by the opinion of respondents from the Mining, Quarrying, Electricity, Gas & Water Supply (17.6 points) followed by the Agriculture Sector (1.0 points) and Market Services (0.9 points).

“Similarly, the outlook for next month, the next three months, and the next six months all indicated optimism with indices of 7.6, 19.3, and 30.7 points, respectively.

“The expected drivers for the optimism on the macroeconomy in the next month are Mining, Quarrying, Electricity, Gas & Water Supply (35.3 points), Agriculture (9.9 points), Market Services (7.8 points), Manufacturing (6.3 points), and Non-Market Services (4.8 points).”