Dollar to Naira Climbs to ₦1,018 – Current CBN Reports
- The value of the Nigerian currency, Naira, is expected to continue falling with a predicted exchange rate of N1,018 per dollar due to the struggling economy and rising inflation, according to the Economist Intelligence Unit (EIU).
- There are anticipations that the Central Bank of Nigeria (CBN) may switch back to a more controlled exchange rate system in an attempt to stem further depreciation of the Naira.
- The CBN has responded to claims of revoking licenses from over 2,000 Bureau de Change operators during the ongoing depreciation of the Naira.
According to recent exchange rates from the Central Bank of Nigeria (CBN), the dollar-to-naira rate has escalated to an all-time high of ₦1,018.
This report focuses on the current economic situation of Nigeria and the causes and potential outcomes of the weakening Naira.
Challenges for the Naira: EIU Forecast
Economists from the Economist Intelligence Unit (EIU) anticipate that the Nigerian Naira will continue to face tough times.
It’s forecasted that the Naira could hit a low of N1,018 against the dollar by the end of 2027.
This prediction is a consequence of the current difficult situation of the Nigerian economy.
The inflation rate has risen to its highest in 17 years, causing worry about the CBN’s capability to manage a flexible exchange rate system.
The EIU report discloses that in 2024, the average exchange rate might be N815 to US$1.
However, by the end of 2027, it’s projected that the Naira will slide to N1,018 to US$1.
During these years, the unofficial or “black market” exchange rate is expected to vary between 10-15% compared to the official rate.
With high and increasing inflation, the Naira is likely to be under considerable pressure in the upcoming years.
CBN’s Response: A Shift in Policy?
The EIU forecasts that the CBN, backed by the Nigerian government, may switch to a more controlled exchange rate system.
This action would be an effort to slow down the Naira’s depreciation.
The CBN’s inexperience in managing a flexible exchange rate system is listed as one of the driving factors behind this possible policy change.
There’s also a current shortage of foreign currency, particularly for foreign exchange requests through Form A and M. This situation, coupled with speculators taking advantage of the circumstances, could encourage the CBN to step up its involvement and intervention in the market.
Considering that nearly 98% of their foreign reserves are cash, this could be a feasible move.
Bureau De Change Operators’ Licenses Revoked
Amid the continuous fall of the Naira at both official and black markets, the CBN has reacted to allegations that it revoked licenses from more than 2,000 Bureau de Change operators.
The current situation puts considerable strain on Nigeria’s economy. The actions taken by the CBN and the policies of the government will undeniably have a significant impact on the future path of the Naira.
The mounting dollar-to-Naira rate paints a grim picture of Nigeria’s economic health. This situation calls for effective strategies from the CBN and the Nigerian government to manage the devaluation of the Naira. The potential switch back to a more controlled exchange rate system might help alleviate the situation, but it remains to be seen how this decision will pan out in the future. With the Nigerian economy at stake, all eyes are on the Central Bank of Nigeria’s next move.
Table 1: Naira to Dollar Forecast (2024-2027)
|Year||Forecasted Exchange Rate (Naira to US$1)|