Analysts at Meristem Securities have projected a worsening depreciation of the naira due to heightened demand for foreign exchange during the festive season. Their Inflation Report, reviewing October’s inflation rate of 33.88%, warns that increased consumer demand and rising transportation costs will drive food prices higher. Potential flooding in agricultural regions may further disrupt harvests, adding to inflationary pressures.
The report also highlights that rising fuel prices and festive season FX demands will exacerbate core inflation. Despite recent gains in foreign reserves, the naira has performed poorly across market segments. Projections indicate the currency may weaken further, with some predicting rates as low as N1,993/$1 by 2028.
Economist Bismarck Rewane, however, offers a more optimistic outlook, suggesting the naira could strengthen by January 2025, citing its undervaluation as a key factor. Rewane argues that stabilizing the exchange rate would help curb inflation and alleviate monetary pressures.
