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FBNQuest has expressed concerns about Nigeria’s inflationary trend and steady erosion of the value of the local currency- Naira -against the US dollar. Erosion of the local currency, FBNQuest opined, would lead to import-led inflation as local prices begin to reflect import pass-through costs. FBNQuest is the investment banking and asset management business of FBN Holdings Plc.
FBNQuest has pointed out that the local producers are extremely tight to access to foreign exchange for the purchase of critical raw materials for production. With the announcement by the Central Bank of Nigeria (CBN) to redesign the Naira, the local currency has taken a further hit, affecting the import-dependent industry.
FBNQuest estimates that the headline inflation rate will be at 22.5% year-on-year by end-2022. It will slow down to 18.6% by end-2023, though market realities reflect a faster rise in the inflation rate. Therefore, the report suggests that it is essential for businesses and investors to have informed views on important macroeconomic variables in order to minimize business risks and develop a long-term strategy to take advantage of opportunities as they arise. It has also advised private mid-cap companies to carefully explore the capital financing options available in the local financial markets to grow their businesses.
FBNQuest has expressed concerns about Nigeria’s inflationary trend, noting that the present currency depreciation may further aggravate the country’s inflation outlook, especially as local prices begin to reflect import pass-through costs. Local producers have continued to complain about poor access to foreign exchange for the purchase of critical raw materials for production. With the announcement by the Central Bank of Nigeria (CBN) to redesign the Naira, the local currency has taken a further hit, raising concerns for businesses dependent on importation.
Higher inflation and exchange rate volatility are associated with higher pass-through of exchange rates into import prices. According to FBNQuest, a conservative projection of the headline inflation rate at 22.5% year-on-year by end-2022 is in view, before slowing to 18.6% by end-2023. However, market realities reflect a faster rise in the inflation rate.
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https://trendsnafrica.com/nigeria-faces-acute-flood-situation/
https://trendsnafrica.com/presidential-election-campaign-in-nigeria-getting-high-pitched/
Also, FBNQuest has advised private mid-cap companies to carefully explore the capital financing options available in the local financial markets to grow their businesses.
