“Naira May Fall To N900/1$ From Demand Pressure” – Experts
Economic and Financial experts according to their new report revealed that $1 may become N900 in 2023
According to Andersen, an independent tax and business consultancy organization, the parallel rate of the naira may fall to N900 in 2023 due to demand pressure if mitigating measures are not implemented.
Andersen Global, which has a global footprint through its member businesses and cooperating firms, announced this in its research titled ‘Nigeria’s 2023 economic forecast,’ which was delivered by its partners in Lagos.
“In 2022, the value of the naira was substantially more constant in the official market than in the parallel market, consequently extending the premium between the two exchange rate windows,” according to the research.
This was owing to increased demand pressure caused by currency illiquidity.
“FX excess demand pressure is expected to persist in 2023, fueled by a variety of factors such as elevated global interest rates attracting portfolio investments away from Nigeria; a structurally import-dependent economy; currency speculation if the gap between official and parallel market rates is not closed; and so on, which will keep the naira under pressure in the foreign exchange windows.”
Based on this, if the CBN maintains the gap, the official rate is anticipated to fall to about N500/$, while the parallel market rate falls to around N900/$ by the end of 2023 unless mitigating measures are implemented.”
According to the 2023 budget, total revenue was anticipated to be N10.49tn and total spending was around N21.83tn, resulting in a budget deficit of N11.34tn, a 39% increase over the previous budget’s deficit of N8.17tn.
The deficit was projected to be covered in large part by domestic borrowings, it noted.
“The Director-General of the Debt Management Office indicated that increase in income production serves as a remedy to the expanding debt profile,” according to the article.
Despite an increase in overall government income and spending, the education and health sectors remain underfunded.
“Rising inflation and the impact of the Russia-Ukraine war on food and energy prices are anticipated to have an influence on Nigeria’s fiscal performance in 2023.”
It stated that the financial services industry rose by 12.7% in the third quarter of 2022.
Many additional factors have influenced the sector, including increased population, more loans to the private sector, the emergence of the fintech industry, a competitive environment, and government changes.
“Current developments in the industry include a focus on digitization and the adoption of new and emerging technologies, currency redesign and cash withdrawal limitations, bank and fintech collaborations, insurtech, and so on,” according to the statement.