A survey conducted by the Central Bank of Nigeria (CBN) suggests that the local currency will fall next year. The apex bank, which made the disclosure at the weekend, said that the survey was carried out by its statistics department and the results detailed in a report titled, “December 2020 Business Expectations Survey Report”. The report predicts a steady rise in interest rates from December to May 2021.
The naira has performed in an oscillatory pattern in recent months the local currency suffered a sharp fall on November 30, 2020, when it exchanged for N500/$1 to hit a twelve-month low.
Since then, the dollar has traded between N460 and N470, forcing prices of imported items upwards. As at Friday, however, one dollar exchanged for N465 at the parallel market.
In the 11-page survey report, the central bank said it conducted the survey online from December 7 to 11, with a sample size of 1,050 businesses nationwide. It said that the survey had a response rate of 91.3 per cent and that the sample covered the agriculture/services, manufacturing, wholesale/retail trade and construction sectors.
It added that the respondent firms were made up of small, medium and large corporations covering both import-oriented and export-oriented businesses.
The report partly read: ‘Respondent firms expect the naira to depreciate in the current month and next month but appreciate in the next two months and the next six months.
‘Inflation level is expected to rise in the next six and 12 months as firms expect the average inflation rate in the next six months and the next 12 months to stand at 13.24 and 14.51 per cent, while the borrowing rate is expected to rise in the current month, next month, next two months and the next six months with indices of 19.2, 14.9, 14.7 and 14.3 points.’
In the survey, respondent firms expressed pessimism on the macroeconomy, while their outlook on the volume of business activities, average capacity utilisation, the volume of total order and financial condition (working capital) were positive.
The CBN stated that respondent firms identified insufficient power supply, unfavourable economic climate, competition, high-interest rates, unclear economic laws, financial problems, unfavourable political climate, access to credit, insufficient demand, lack of equipment, lack of materials input, and labour problems as major factors constraining business activities in December 2020.