CBN survey finds Nigerian businesses expectant of naira appreciation this month

• As firms expect inflation rates to decline

A new Central Bank of Nigeria (CBN) survey report released on Friday has found that Nigerian businesses expect that naira will appreciate this month, judging by confidence indices which stood at 27.3 and 44.8 points, respectively.

Additionally, firms expect inflation rates to fall this month at -15.0 points, while also expecting borrowing rates to decline by  -0.9 points in the month.

According to the statistics department of the apex bank, the Nigerian currency appreciated in July, opening at N362/$ for the month and appreciated to a 2-year high of  N360/$ on 4th of July, before closing at N361/$ on July 13th.

A total sample size of 1,050 businesses comprising of  small, medium and large organisations across import and export sectors, in the July 2018 Business Expectations Survey (BES), was carried out during the period July 12-20, 2018 showed Nigerians confidence in naira appreciation this month.

The survey reported that naira traded  between N361.16/$ and N362.58/$ at the Investors and Exporters Foreign Exchange (IEFX) in the  days under review, while total forex traded at the IEFX window in the first half of July stood at  $1.72 billion compared June’s $2.29 billion.

Although firms were optimistic on naira appreciation front, their outlook on financial conditions (working capital) and average capacity utilization declined, as the indices stood at 2.2 and 10.0 index points respectively when compared with the respective 11.7 and 23.4 points recorded in June 2018.

Also, respondents’ overall confidence index (CI) on the macro economy in July 2018 declined at 13.6 index points when compared with the level of 34.7 index points recorded in June 2018. However, businesses outlook for August 2018 showed more confidence on the macro economy at 58.7 index points.

“Firms identified insufficient power supply, high interest rate, unfavourable economic climate, financial problems, unclear economic laws, insufficient demand and unfavourable political climate as the major factors constraining business activity in the current month,” the report read in part.