EIU Delivers Powerful Predictions About Naira, Others in 2024, Lists Factors to Drive Currency
- A new report by the Economic Intelligence Unit (EIU) has stated that the naira would see a massive decline in 2024
- It highlighted that Egypt, Angola, Ethiopia, and Sudan would also see their currencies decline for a stated period
- It added that the rate of decline would depend on how each of the economies play out and specific policies put in place
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The Economic Intelligence Unit (EIU) predicted that the naira would depreciate by 10% or more in 2024.
It stated this in its Africa Outlook 2024 report titled "Strong growth amid heated elections and financial woes."
Source: UGC
In addition, the domestic currencies of the Egyptian pound of Egypt, the kwanza of Angola, the birr of Ethiopia, and the Sudanese pound of Sudan are expected to fall by double digits during the year, according to the report in a BusinessDay report.
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More than 10% depreciation is likely to occur
The analysis stated that whether or not the devaluation would be more significant than 10% would depend on how their economies' macroeconomic dynamics played out.
It added that during the year, the currencies of most African nations would depreciate in different amounts relative to the US dollar.
It stated:
“We forecast currency depreciation against the US dollar across much of Africa in 2024, although adjustments are expected to be less severe than those recorded in 2023.”
Naira to follow a downward trend
Reiterating its earlier warning highlighted in previous reports, it cautioned about the naira's downward trend, kicked off by President Bola Tinubu's implementation of foreign exchange market convergence.
Legit.ng had earlier reported that the Central Bank of Nigeria had abolished all exchange rates, including the black market.
Nigerians have suffered dramatically due to the decline of the naira's value of more than 50% in both markets since the announcement of the convergence in May.
The country's central bank is unable to meet the backlog of foreign exchange demand, which is a necessary condition to help stop the naira's decline, according to a November analysis from EIU.
It said,
“In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved.”
Charles Abuede, a financial analyst told Legit.ng,
"The level of volatility in the foreign exchange market will wield a major impact on the naira while we head into the new year.
Expert speaks on naira to the dollar exchange rate in 2024 as FG introduces new dollar account charges
Legit.ng reported that Bismarck Rewane, the chief executive officer (CEO) of Financial Derivatives, has revealed his expectations for Nigeria's exchange rate market.
Speaking at a recently held Parthian Partners 2024 economic outlook session in Lagos, the renowned economist said he expects the naira to appreciate in the forex markets in 2024.
He also noted that inflation is likely to "drop in 2024 and could go as low as 17% in 2025."
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Source: Legit.ng
