The European Intelligent Unit, EIU, has predicted that the Nigerian currency, the naira will exchange for N1,018 to US$1 in 2027.
This is due to high and rising inflation, the economist group stated in its latest report.
According to the EIU, in 2024, the exchange rate will be N815 to US$1 and it will slide to N1,018 to US$1 by the end of 2027.
The rate in the black market over the period, EIU says, will be 10–15 per cent of the official rate.
The EIU forecast came three days after Beni Lar, a lawmaker representing Langtang North/Lantang South Federal Constituency of Plateau State in the House of Representatives, raised alarm over the soaring exchange rate.
Presenting her motion titled “Need to stabilise Nigeria’s foreign exchange rate”, Lar said: “The naira has been on a rapid decline against the US dollar, euro and pounds sterling, thus leading to hike in the prices of goods and services.
“This has worsened the inflationary situation and the cost of doing business in Nigeria. The high prices of goods and services are taking a huge toll on the average Nigerian, making life unbearable.
“If this is not reversed, $1 could be exchanged for N1,000 by December 2023 and the current economic situation may trigger an inflationary spiral that may throw Nigeria into economic recession and depression.”
The House, however, rejected the motion.
The EIU also noted in its report that the Central Bank of Nigeria, CBN, lacks experience in handling a flexible exchange rate system.
“The CBN lacks experience in conducting monetary policy under a float, and the need to control rapidly increasing inflation will become more acute over time,” the report stated.
“Our forecast is finely balanced, but we expect a return to heavier exchange-rate management from the second half of 2023 as the naira slides beyond N800:US$1 from N770:US$1 in early July.”
The economists also predicted that the federal government will go back to a system where they have more control over the exchange rate, noting that this will be part of the CBN’s effort to stop the naira from losing its value much further.
