CBN Survey Indicates Naira to appreciate in December

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CBN Survey Indicates Naira to appreciate in December

A Central Bank of Nigeria (CBN) survey expressed that Naira is expected to appreciate in December.

According to the survey, “Respondent firms expect the naira to depreciate in the current month but appreciate in the next month, next two months and next six months, as their confidence indices stood at -3.4, 12.3, 21.8 and 35.2 index points, respectively.”

The naira last week strengthened by 0.3per cent to N395.00 against the dollar at the Investors & Exporters Foreign Exchange (I& E) Foreign Exchange window, while it was flat at N475.00 against the dollar in the parallel market.

The November 2020 Business Expectations Survey Report, released by the apex bank stated that the November 2020 survey was conducted from November 9-13, 2020 with a sample size of 1050 businesses nationwide.

A response rate of 89.5 per cent was achieved and the sample covered the agric/services manufacturing, wholesale/retail trade and construction sectors.

On expectation on borrowing rates, respondent firms said they expected borrowing rates to rise in  November, next month, next two months and the next six months with indices of 16.2, 15.5, 17.0 and 18.6 points, respectively.

They report also noted that firms expected the average inflation rate in the next six months and the next 12 months to stand at 15.62 and 14.03 percent, respectively

According to the survey, “Respondents anticipate increase in economic conditions as the index on economic growth rate in the short run stood at 17.0 and 27.7, 35.2 and 46.8 points, respectively for the current month and next month next two months and next 6 months.

“Respondent firms expressed dissatisfaction with the management of inflation by the Government with a negative net satisfaction index of -25.1 in November 2020. The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents.”

On employment and expansion plans, the survey added that, “Respondent firms’ opinion on the volume of business activities indicated a favourable business outlook for December 2020 and January 2021 with indices of 56.0 and 61.4, respectively.

“Businesses also hope to employ in December 2020 and January 2021 as the outlook was positive at 19.1 and 22.3 index points, respectively.

“The break down by sector showed that the wholesale/retail trade sector with (22.4 points) has the highest prospect for employment in the next month, followed by Agric/services sector with an index of 21.7 points, construction (16.2 points) and manufacturing sector (14.3 points).

“Respondents were also optimistic about the volume of business activity and employment outlook index in the next six months as all indexes were positive.

“An analysis of businesses with expansion plans in December showed that the Wholesale and Retail sector has the highest disposition to expand with 50.0 index points. The manufacturing sector has 43.7, Agric/services sector had an index of 39.5 points, the construction sector had 34.5 index points.”

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