Firms expect further naira depreciation, dollar sells for N440

Business organisations in the country expect the naira to depreciate further in the next few months, a report by the Central Bank of Nigeria has said.

The dollar on Thursday sold for N440 in the parallel market, as Bureau de Change operators were still awaiting CBN’s resumption of foreign exchange sale to them.

The CBN’s May 2020 Business Expectation Survey Report said, “Respondent firms expect the naira to depreciate in the current month, next month, next two months and appreciate in the next six months.

“Inflation level is expected to rise in the next six months and 12 months, while the borrowing rate is expected to rise in the current month, next month, next two months and next six months.”

Highlights of the survey outcome showed that respondent firms expressed pessimism on the macro economy.

The report also showed that respondents’ outlook on the volume of total order, credit access, average capacity utilisation and financial conditions (working capital) were negative for May.

They were, however, optimistic about the volume of business activity.

The firms identified insufficient power supply, financial problems, unfavourable economic climate, competition, high interest rate, insufficient demand, unclear economic laws, access to credit, unfavourable political climate and insufficient demand as major factors constraining business activity.

At -66.2 index points, the overall confidence index indicated respondents’ pessimism on the overall macro economy in May.

The respondents remained pessimistic in their outlook for June with a confidence index of -4.2.