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Nigeria’s high inflation rate will be tamed soon – Onanuga

"What is obvious in the report is that market forces are yet to reflect the strengthening of the naira in recent weeks against the dollar. The effect will be noticed as old stocks are replaced with new ones bought with depreciated dollars.

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The Presidential Adviser on Information and Strategy, Mr. Bayo Onanuga, has predicted that Nigerian inflation will soon stabilize after it surged to 33.2%, the highest level since March 1996.

Buttressing his point in a post he made on Monday via his official X handle, he pointed out that with the remarkable trajectory of the naira, “indications are that it will slow down” the inflation rate soon.

After months of persistent decline, the Nigerian currency has recovered since March and is now the best-performing fiat currency in April, according to Persecondnews.

Goldman Sachs economist Andrew Matheny expects the Nigerian currency, the naira, to continue its rally, which has seen it gain 12% against the U.S. dollar in April alone.

This rally has propelled the naira-to-USD exchange rate from a low of over NGN1,800 per greenback in early March to just over NGN1,230 per dollar in the second week of April.

Onanuga said: “Inflation still appears untamed, according to the latest report by NBS. But indications are that it will slow down as the naira continues to strengthen in the market.

“NBS reported that in March 2024, the headline inflation rate increased by 1.50% point to 33.20% relative to the February 2024 headline inflation rate, which was 31.70%.

“On a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%.

“What is obvious in the report is that market forces are yet to reflect the strengthening of the naira in recent weeks against the dollar. The effect will be noticed as old stocks are replaced with new ones bought with depreciated dollars.

“The naira had lost 43% of its value up till mid-February. But since then, it has rallied greatly, becoming the most performing currency among global currencies.

“Governor Olayemi Cardoso of CBN and his team have their job cut for them to find ways of reining in the inflation when they meet May 20–21, about a week to the Tinubu administration’s first anniversary.”

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