Businesses, particularly those that rely on imported raw materials for input have bemoaned the rate at which the naira is depreciating, saying the cost of goods and services may continue to soar, portending more hardship for Nigerians.
According to Moses Okiodo, a manufacturer, some industry that rely on imported raw material to produce products in the country are closing shop, while those still struggling to manufacture will be rolling out products that may be out of the reach of impoverished citizens.
Babatunde Ojomo, a pharmacists told Blueprint that, the harsh environment, including the foreign exchange problem have sent a number of multinationals packing, saying, it has resulted to very steep increase in the prices of some medication.
He appealed to the fiscal and monetary authorities to quickly do something about the situation before its gets further out of hand.
The naira last week weekend at all segments, with the NAFEM or official rates hitting an all-time low of N1,099.05 to the dollar, a fall of 18.5 per cent week-on-week (w/w) Basis. The dollar rose 1.1 per cent against the naira to N1,173/$.
There was however improvement in level of activity at NAFEM as value rose by 7.6 per cent or $42.8 million to $606 million last week
“Next week, we expect rates across foreign exchange segments of the market to diverge on the back of lingering demand-supply imbalance” said analysts at Afrinvest.
The markets would need to see a string of reports of a similar nature before concerns could be fully voiced, as the Fed is unlikely to be overly concerned by the strength of the labour market as it was reported yesterday.
Meanwhile, the Director of the Communications Department of the International Monetary Fund (IMF), Julie Kozack, has advised the CBN under its new leadership is withdrawing excess liquidity from the system, which has contributed to high inflation in the country.
Recall that in his keynote address at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), the CBN Governor, Yemi Cardoso, stated his desire for monetary policies to lead to lower interest rates to drive up borrowing and investment in the real sector.
However, this appears to be a medium-term play as he also confirmed the apex bank will continue to squeeze liquidity as a monetary policy strategy to curb inflation.
“While absolute inflation is still rising, the declining rate of growth indicates progress. The CBN is confident that with continued tightening measures for the next two quarters, we will be able to effectively manage inflation.” Cardoso
The apex bank also set up a new liquidity management committee within the Bank to address the issue of currency in circulation and naira scarcity.
Using recent data from the CBN, the currency in circulation (CIC) reached a new year high of N2.99 trillion by October 31, 2023.
