Some sectors may witness drop in prices after naira appreciation, Economist

Some sectors may witness drop in prices due to naira appreciation - Economist

News Agency Of Nigeria

March 31, 2024 5:33 PM

NAN reports that the Naira exchanged for as high as ₦1,900 to the dollar in February but as of March 31, the parallel market rate of the Naira was ₦1,200 to the dollar.

Some sectors may witness drop in prices due to naira appreciation - Economist [The Cable]

A Development Economist, Prof. Ken Ife, says some sectors may soon likely witness a drop in prices as the Naira appreciates against the Dollar.

Ife said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Sunday.

He said the sectors likely to witness a decrease in prices included the sectors strongly dependent on transport, diesel, and imported items.

“ Imported food has to be transported across the country, so they are heavily dependent on the high cost of transportation.

“ But that will come down because diesel is what is used to run the buses and trucks that transport these foods across the country.

“So they will come down because the average price of diesel has come down to N1,000 from N1,800 and it may come down further. So that seems to be putting down prices of the dependent products.

“Then some other things like travel and transport are likely to come down a bit too.”

Ife, also a Public Policy Analyst, said that energy-dependent operations were also going to be influenced as the Naira appreciates against the dollar.

“Forex affects energy costs as well so the manufacturers that use diesel to run their generators, their prices will come down a bit.

“At the same time, you know forex is also bringing down the prices of imported goods which are highly inflationary.”

He said the Federal Government was doing its best to shake down currency speculators and foreign exchange manipulation in the market, citing the 36 million dollar action against Binance, a global company that operates one of the largest cryptocurrency exchanges.

Ife said the banks were also being harassed to sell any money outside their Net Open Position (NOP) of 20 per cent.

“These measures are having immediate effect at the forex end. Not just because there is an increased inflow of forex now both in diaspora remittances and from foreign portfolio investments coming in to accrue very high interest rates.

“Also because the government is shaking down speculators in the market. These are all adding up to force the dollar to come down.

“But how long it will stay down is a different story. It has to stay down as long as there is more supply of forex.

“There are difficult times ahead but we can see light at the end of the tunnel. So Nigerians should be patient, prices will moderate downwards up to a point.”

NAN reports that the Naira gradually appreciated after the last Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) held on March 25 and 26.

The CBN announced further tightening of the monetary policy by raising the Monetary Policy Rate (MPR) by 200 basis points, to 24.75 per cent from 22.75 per cent raised in February to rein in inflation.

The committee also took other monetary policy actions that have also led to the steady appreciation of the Naira against the dollar and stability in the exchange market in the last few weeks.

NAN reports that the Naira exchanged for as high as ₦1,900 to the dollar in February but as of March 31, the parallel market rate of the Naira was ₦1,200 to the dollar.

News Agency Of Nigeria