Economy
Nigeria’s Exchange Rate to Remain Largely Volatile in 2025—Report
By Adedapo Adesanya
Veriv Africa, a data insights company, has forecast that Nigeria’s exchange rate will remain largely volatile in 2025, extending challenges facing the local currency this year.
In its new Nigeria Macroeconomic Outlook 2025, the firm said this would be driven by internal and external economic conditions and geopolitical dynamics amid challenges including high inflation and high cost of capital.
It noted that Nigeria’s heavy reliance on imports and the underdevelopment of key real economy sectors such as agriculture and manufacturing, have played an underlying role in shaping the exchange rate trend.
Business Post reports that so far in 2024, the Naira has dropped 72 per cent on the Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX), which is recognised at the official rate. It currently trades around the N1,650/$1 mark.
Key contributors to the Naira’s depreciation include its devaluation carried in the early days of President Bola Tinubu’s administration in June 2023, sluggish economic growth, weak export base, and ongoing geopolitical tensions, which also contribute to the volatility in crude oil prices.
The company disclosed that Nigeria’s failure to meet its 1.5 million barrels per day crude oil output quota from the Organisation of the Petroleum Exporting Countries (OPEC) has also disrupted its trade balance, further straining the Naira.
For next year, Veriv Africa believes that speculations will continue to play a part in the exchange rate dynamics.
The Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC), and the Office of the National Security carried out some unorthodox moves to curb speculation earlier this year, but this only brought about a short-lived support for the local currency.
“A high inflationary environment will continue to feed into the dampening of non-oil exports, which could exacerbate the depreciation of the Naira. Poor aggregate supply and limited export potentials have limited external reserves and foreign exchange inflow,” the report shared with this newspaper noted.
In the near term, there are also no indications that the Naira will appreciate, the report said, adding that unless there is a marked increase in foreign exchange inflow and external reserves. Nigeria currently has less than $40 billion in its reserves.
The report also pointed out that despite various policy interventions from the Central Bank of Nigeria (CBN), including inflation targeting to stabilise the Naira, these measures have been ineffective due to external factors affecting exchange rate dynamics and internalstructural challenges.
“Without significant improvement in the abovementioned conditions, the lacklustre performance recorded this year will likely be repeated in 2025,” it added.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.46 per cent gain on Thursday, December 19, boosted by three stocks, which closed higher at the close of transactions.
Nipco Plc improved its closing price by N13.64 during the trading day to N150.10 per share compared with the preceding trading day’s N136.46 per share, Geo-Fluids Plc gained 33 Kobo to end the session at N3.88 per unit versus Wednesday’s closing value of N3.55 per unit, and UBN Property Plc appreciated by 16 Kobo to settle at N1.89 per share, in contrast to midweek’s closing price of N1.73 per share.
On the flip side, Industrial and General Insurance (IGI) Plc depreciated by 1 kobo to trade at 17 Kobo per unit compared with the preceding trading session’s 18 Kobo per unit.
At the close of business, the market capitalisation of the bourse increased by N4.73 billion to finish the trading day at N1.034 trillion compared with the midweek trading session’s N1.029 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) went up by 13.77 points to wrap the session at 3,017.07 points compared with 3,003.30 points recorded in the previous session.
On Thursday, the volume of securities traded by investors surged by 603.9 per cent to 2.3 million units from the 59.624 units recorded a day earlier.
However, the value of shares traded yesterday slumped by 48.9 per cent to N2.3 million from N4.6 million as the number of deals declined by 12 per cent to 22 deals from the 25 deals carried out on Wednesday.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with 752.3 million units valued at N7.8 billion, and Afriland Properties Plc with 297.7 million units sold for N5.3 million.
Aradel Holdings Plc also remained the most active stock by value (year-to-date) with 108.7 million units valued at N89.2 billion, trailed by Okitipupa Plc with 752.3 million units sold for N7.8 billion, and Afriland Properties Plc with 297.7 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira improved its value against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, December 19 by 0.18 per cent or N12.82 to sell at N1,541.38/$1 compared with the preceding trading day’s N1,554.20/$1.
Equally, the Nigerian Naira strengthened its value against the Pound Sterling in the official market yesterday by N17.84 to trade at N1,936.23/£1 compared with the preceding session’s N1,954.07/£1.
In the same vein, the local currency appreciated against the Euro at the same market segment by N77.46 to quote at N1,537.43/€1 versus midweek’s closing rate of N1,614.89/€1.
Also, the Naira gained N10 against the greenback during the trading session to settle at N1,650/$1, in contrast to the previous day’s closing value of N1,666/$1.
A look at the digital currency market showed that the price of Bitcoin (BTC) plunged below the $100,000 level to the $96,000 mark on Thursday, triggered by the US Federal Reserve Chair Jerome Powell disappointing investors with his comments on US interest rate cut expectations for next year.
US Federal Reserve’s projection of a slower pace of rate cuts for next year and Mr Powell’s hawkish tone on rising inflation expectations led to a broad-market selloff across assets like crypto.
Business Post reports that BTC lost 4.9 per cent yesterday to quote at $96,330.89.
Dogecoin (DOGE) went down by 13.7 per cent to sell at $0.313, Cardano (ADA) slid by 10.5 per cent to trade at $0.8796, Solana (SOL) slid by 9.7 per cent to finish at $189.95, and Ethereum (ETH) recorded a loss of 9.2 per cent to finish at $3,342.61.
Further, Litecoin (LTC) shrank by 8.1 per cent to settle at $99.51, Binance Coin (BNB) slumped by 5.1 per cent to close at $666.49, Ripple (XRP) recorded a 4.5 per cent fall to end the trading day at $2.25, and the US Dollar Tether (USDT) lost 0.02 per cent to quote at $0.9994, while the US Dollar Coin (USDC) traded flat at $1.00.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited continued its positive run on Thursday with a 0.77 per cent growth as its year-to-date (YtD) return increased to 35.41 per cent.
This means that the nation’s stock market has grown above the inflation rate of 34.60 per cent recorded in November 2024, according to the National Bureau of Statistics (NBS), and a benchmark interest of 27.50 per cent.
Business Post reports that the local bourse has remained resilient amid the challenging business environment in Nigeria, giving investors succour.
Yesterday, the All-Share Index (ASI) went up by 770.56 points to 101,248.02 points from 100,477.46 points and the market capitalisation increased by N467 billion to close at N61.375 trillion compared with Wednesday’s N60.908 trillion.
There were 47 appreciating shares and 17 depreciating shares on Thursday, representing a positive market breadth index and strong investor sentiment.
Honeywell Flour, UAC Nigeria and Aradel Holdings gained 10.00 per cent each to close at N5.50, N27.50, and N730.40 apiece, NAHCO expanded by 9.96 per cent to N41.95, and MRS Oil rose by 9.96 per cent to N175.60.
Conversely, Tantalizers declined by 9.77 per cent to N1.57, Multiverse slumped by 9.73 per cent to N5.10, John Holt lost 9.73 per cent to trade at N5.88, Caverton crashed by 7.78 per cent to N2.26, and Omatek shrank by 7.35 per cent to 63 Kobo.
A total of 411.4 million stocks valued at N26.3 million exchanged hands in 10,260 deals during the session versus the 389.7 million stocks worth N9.2 billion transacted in 9,573 deals at midweek, implying a jump in the trading volume, value and number of deals by 5.57 per cent, 185.87 per cent and 7.18 per cent, respectively.
The most traded equity for the day was Universal Insurance with 38.2 million units valued at N14.9 million, AIICO traded 21.0 million units worth N31.2 million, GTCO transacted 20.4 million units for N1.1 billion, UBA exchanged 18.6 million units worth N623.0 million, and Prestige Assurance sold 15.6 million units valued at N12.6 million.
When the market closed for the session at 2:30 pm, the insurance index was up by 3.79 per cent, the banking sector grew by 0.73 per cent, the consumer goods counter improved by 0.69 per cent, and the energy space rose by 0.32 per cent, while the industrial goods sector depreciated by 0.63 per cent.
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