Experts have kicked for an upward review of the official exchange rates from the current N197 to N275-N285 to a dollar, as Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, commences their meeting today, Monday, May 22.
This call is coming on the heels of the sustained pressure on domestic output and elevated headwinds in the economy.
Key indicators in the economy continue to worsen on the back of prolonged foreign exchange (FX) supply bottlenecks, delayed budget implementation, petrol market crisis, galloping inflation; which is dragging consumer spending, negative gross domestic product (GDP) growth rate and weaker corporate earnings.
However, financial experts said the recent policy pronouncement by the Minster of State for Petroleum Resources,Ibe Kachikwu, on guided deregulation of the petrol market is expected to take the centre stage given the impact on key monetary policy variables going forward.
The Naira remains weak because of the excess demand over supply. Following the announcement of a new pump price, the value of the Naira depreciated further at the parallel market by 9.58per cent to N355/$ as at May 16, from N321/$ before the announcement of the increase in fuel price.
Latest GDP numbers released by the National Bureau of Statistics (NBS) indicates that Q1:2016 GDP contracted to 0.36per cent Y-o-Y (as against 3.94per cent growth in Q1:2015) as structural challenges in the system bites harder.
Meanwhile, Consumer Price Index (CPI) for April released earlier in the week indicated that inflation rate galloped to 13.7per cent in April, 2.3per cent point higher than 11.4 per cent in February, just before the last MPC meeting.
