Inflation, exchange rates to drop in 2024 – CBN

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said on Thursday the country’s inflation and exchange rates would drop in 2024.

Cardoso, who stated these when he appeared before the Joint National Assembly Committee on Banking, Insurance, and Other Financial Institutions in Abuja, also projected less revenue from oil exports in the coming year due to prevailing domestic factors.

He said the total trade from the Nigerian foreign exchange market stood at N18.804 billion as of the third quarter of 2023.

The CBN governor stressed that the outlook for the nation’s domestic economy for 2024 was very positive as both the inflation and exchange rates would absolve the volatile pressures on them and become stabilised.

He said: “The outlook for the domestic economy remains positive and is expected to maintain the positive trajectory for 2024.

“Inflation pressures may persist in the short-term but are expected to decline in 2024.

“Exchange rate pressures are also expected to reduce significantly with the smooth functioning of the foreign exchange market.”

Cardoso pointed out that the unification of the exchange rate windows in June had led to a new approach to the management of exchange rates aimed at reducing arbitrage, rent-seeking behaviour, and speculation in the market.

“The policy aims to create a market where the demand and supply of foreign exchange determines the exchange rate.

“The premium has narrowed and our focus on increasing the autonomous FX supply will lead to more stability and further narrowing of the premium.

“Total trade in the third quarter of 2023 stood at N18.8 billion and exports valued at N10.3 billion, while total imports stood at N8.4 billion.

“This represents a positive trade balance which will lead to an increase in the external reserves.

“We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. The OPEC-approved quota for Nigeria is 1.8mbpd, which is higher than the 2024 budget assumption.

“However, the country’s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd but the highest level of production during the year was about 1.35mbpd in Q3 of 2023.

“The reasons for the underperformance of the oil production target include crude oil theft and pipeline vandalism, production shut-ins, and divestments by major oil companies.”

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