CBN worried over impact of forex rate, PMS price on Nigeria’s economy

The Central Bank of Nigeria (CBN) said the country’s economy is exposed to the fluctuation of prices and rates in the petroleum market and the foreign exchange market.

In a communique released on Tuesday, which conveyed the outcome of the Monetary Policy Committee (MPC) meeting, the CBN said it has a moderated outlook for the global and domestic economies.

CBN disclosed that high prices of Premium Motor Spirit (PMS) and other energy products; as well as pressure in the foreign exchange market will affect the growth of Nigeria’s economy.

Recall that this year, the price of fuel has increased from N189 per litre to N580 this year, with oil marketers projecting the pump prices could rise above N700 per litre.

Also, the exchange rate between the naira to United States Dollar (USD) has increased from N461.50/$1 to N791.42/$1 as of Tuesday.

READ ALSO:CBN raises interest rate to 18.75%

These increases are expected to have a ripple effect on the domestic economy, which the CBN projected will grow by 2.66 per cent in 2023.

In the communique addressing the global and domestic economy, CBN said: “The overall outlook for the recovery of both the global and domestic economies moderated, however uncertainties remain. At the global level, legacy headwinds such as the war in Ukraine and slow recovery of the Chinese economy as well as ongoing bricsification are key downside risks to output growth.

“In the domestic economy, factors precipitating the uncertainties remain the continued insecurity, particularly in farming communities; high prices of PMS and other energy products; as well as pressure in the foreign exchange market.

“Forecasts for key macroeconomic indicators for the Nigerian economy indicate that the economy will continue to recover moderately through 2023 to grow by 2.66 per cent (CBN), 4.20 per cent (FGN) and 3.20 per cent (IMF).”

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