Business

Research sees naira rebound to N1,317/$

The FBNQuest Research Economic Outlook Report 2024 has projected significant volatility in the exchange rate with a year-end rate of N1,317/$ following uncertainty surrounding liquidity inflow.

The report also expects continued pressure on domestic prices due to higher transportation costs and persistent insecurity stemming from renewed bandits’ attacks on farmers in food-producing areas.

The report also anticipates the transmission effect of the deregulation of the downstream and FX crisis to exert upward pressure across core components on the inflation basket.

The Head of Equity Research at FBNQuest, Tunde Abidoye, stated that despite the myriad headwinds confronting the economy, such as low gross domestic product (GDP) growth, high inflation rate and downward pressure on the naira exchange rates, the government’s steadfast commitment to policy reforms holds good prospect for the economy.

On the fiscal front, Abidoye said the proposed tax reform is poised to incrementally elevate non-oil revenue from less than five per cent of GDP to the targeted 18 per cent.

He said this requires strategic policy interventions and concerted efforts to strengthen tax compliance and encourage investments, especially at the base level, for increased business productivity and sustainability.

Abidoye also stated that Nigeria’s low oil output, hovering around 1.3 million barrels per day (mb/d), excluding condensates, posed a significant obstacle to achieving revenue targets.

He said, however, given the issues regarding crude oil theft and pipeline vandalism in the Niger Delta, the bank expected oil output to be constrained.

According to him, the bank forecasts an average price of $72 per barrel for the Bonny Light and an end-year level of $76 per barrel, noting that potential upside risks arising from geopolitical concerns may be favourable for prices.

On the high inflationary pressures, the bank said the monetary authority would maintain a tight monetary policy stance through 2024.

Back to top button