The Naira hit yet another all time low on Thursday after it sold for as low as N490/$1 in some sections of the black market. The local currency has been on a steady decline since the start of the month following a repertoire of bad policies by the Central Bank of Nigeria.
As Nigerians approach the last quarter of the year and look forward to Christmas, Nairametrics readers have been asking us how much they think the exchange rate will trade for by the end of the year. It’s a tough question to answer considering the quantum of factors that influence the direction of the exchange rate. One of the most important of course is liquidity. If liquidity continues to dry up like we have been seeing, then expect the value of the naira against the dollar to continue to plummet.
Nevertheless, our analysts tried to dig in using the trajectory of the rate of depreciation of the naira to project what it will be by Xmas assuming the status quo remains. Status Quo being that liquidity is still paltry, the current CBN Governor remains in power, oil prices below $50, foreign investors remain away etc.
As at September 1 the exchange rate of the Naira was N424/$1 and by September 29 it was N490/$1. This gives us a Compounded Annual Growth Rate (CAGR) of 0.5% daily for 29 days. Using that same growth rate, we can extrapolate to determine what the exchange rate will be by Christmas.
Since we currently have about 86 days to Christmas, at today’s rate of N490 and a CAGR of 0.5% daily the exchange rate could trade at a whopping N752/$1 by Xmas.
Remarkably, the exchange rate has been growing at a rate of 0.45% since the introduction of the flexible exchange rate system (otherwise called floating of the naira). The exchange rate was officially floated on the 20th of June 2016. According to our records, the black market traded at N345/$1. 72 days later and it is trading at N490/$1 giving us a CAGR of 0.48%. This is also close to the 0.5% CAGR calculated on a daily basis above.
it maybe 700 naira to 1 dollar before xmass.i think it will or may fall to 300 naira to 1 dollar in future,the major problem started after this SAP,and previous govt failed to address their mistakes.i.e is to amende this sap,since the coming of democratic value,govt failed to clearly identifiea the problem,and offers solution to the problem,this recession will offer Nigerian people and the Nigerian govt opportunity to address the fundamental problem facing Nigerian economy.i am happy that this govt have started to clearly isolates and identifies the problem in Nigeria. facilities,non-functioning local gov,inflation,low tax collection,amenities,manufacturing bases.
once you have identifies your problem have been solved the problem,the govt have reviewed taxes policies,which could take effect next year.
This sellng of asset maybe right or wrong,this selling of joint venture if done will lead to the full commercialization of nnpc.it will frees the economy in the petrol sector,the cbn is opposed to the selling of this asset,so do the nass.THIS OPPOSTION IS ABOUT FEAR AND POLITICAL.this will create problem to the cbn,the political issues is that most Nigeria feared,it will lead this economic powers to foreigners and certain and few Nigerians,
Govt could do better in the selling of those asset.THEY SHOULD BE MORE TRANSPARENT AND MORE DETAILS AND LEGAL FRAMEWORK,and lets Nigerians decides,they should address this issues of fear.
With manufacturing oversea by Nigerian company, and ideas by the private sector asked, by the ministry of finance.
Govt have cancelled the export guarantee,because almost 96 % is abused.the reason i think of why it went wrong.is that govt failed to monitored this process.
What the british govt plan to pushes export oversea is for them to publishes a weekly or monthly magazine that, deals with of rules,regulation,custom,tariff as it affects those respective country,this magazine are distributed to small-scaled business unit free and to local govt library. in each month they,concentrate on respective country,i think,there is another newletter done by british govt by their embassies commercial attaches researches,which brings together prospective importers and exporters together.some of their researches are online.
In life,business do not be ordinary,you must always try to reinvents yourself.you must have an edge over your competitor,that is why americans cars manufacturers do not export no cars oversea,that is why mr trump is making a lot of noise about Chinese export or trade imbalances.he may not win his war on trade.it will take more that 8 yrs to addresses this issues of world trade imbalances.