Report Says Naira May Fall to N900 to a Dollar in 2023 Amid Demand
- A report by Andersen, a tax and business advisory firm, said the naira might crash to N900 per dollar in 2023
- The report stated that unless authorities take urgent steps to address the parallel market, the naira is doomed to fall
- It also said that Nigeria’s burgeoning debt profile is one of the factors weighing down the naira
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An independent tax and business advisory company, Andersen, has stated that the unofficial exchange rate, also known as the parallel or black market, may fall to N900 to a dollar in 2023 from demand pressure if urgent measures are not taken.
The company disclosed this in its statement titled ‘Nigeria’s 2023 economic outlook, present in Lagos by its partners.
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The report said:
“In 2022, the value of the naira was relatively more stable in the official market than in the parallel market, thereby widening the premium between the two exchange rate windows. This was due to the heightened demand pressure spurred by FX illiquidity.”
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Investors running away due forex volatility
Foreign exchange excess demand pressure is predicted to continue in 2023, caused by different factors, as heightened global interest rates attract portfolio investment away from Nigeria.
As an import-dependent economy, currency speculations will make the naira remain under pressure in the foreign exchange markets if the gap between the official and parallel rates is not closed, Anderson’s report said.
It said the total revenue was estimated at N10.49 trillion and the total expenditure at N21.83 trillion, indicating a budget deficit of N11,34 trillion, a 39 per cent jump from the 2022 budget deficit of N8.17 trillion, a Punch report stated.
Inflation eroding the value of the naira
The report quotes the Director-General of the Debt Management Office as saying that progress in revenue generation serves as a solution to the country’s mounting debt profile.
It also stated that the education and health sectors should be addressed despite government income and expenditure increases.
“The rising inflation rate and the impact of the Russia-Ukraine war on food and energy prices are likely to affect Nigeria’s 2023 budget performance,” the report stated.
According to the report, the financial services sector grew by 12.7 per cent in the third quarter of 2022, driven by several factors such as tech adoption, increasing population, extending credit to the private sector, the rise of the fintech industry and government reforms, among others.
The sector has also been driven by factors such as technology adoption, increasing population, increase in credit to the private sector, the rise of the fintech industry, competitive landscape, and government reforms, among others.
Experts predict naira exchange rate to the US Dollar and other currencies in 2023
Legit.ng earlier reported that In light of the Naira's woes, economists had provided a peep into the future of what Nigerians should expect in 2023.
You will recall that Legit.ng reported the Naira lost more than 23% of its value in 2022, the most significant devaluation in a single year since it was introduced as Nigeria’s store of value and medium of exchange on January 1, 1973.
Economists such as Bismark Rewane, CEO of Financial Derivatives Co Ltd, Johnson Chukwu, CEO of Cowry Asset, Dr Muda Yusuf, CEO of the Center for the Promotion of Private Enterprise (CPPE), and Prof Pat Utomi, political economist, have all provided good and bad predictions for the Naira in 2023.
Source: Legit.ng
