Inflation, exchange rates will decline in 2024: CBN

The Central Bank of Nigeria (CBN) says the rising inflation and exchange rates will decline in 2024.

The apex bank also projected less revenue from oil exports in the coming year.

CBN Governor Olayemi Cardoso stated these on Thursday in Abuja when he appeared before the Joint Committee on Banking, Insurance and other Financial Institutions.

Mr Cardoso said the total trade from the Nigerian Foreign Exchange Market (NFEM) stood at N18.804 billion as of the third quarter of 2023.

According to him, the outlook for the nation’s domestic economy for 2024 is very positive, as both the inflation and exchange rates would absolve the volatile pressures on them and stabilise them.

“The outlook for the domestic economy remains positive and is expected to maintain the positive trajectory for 2024,” said Mr Cardoso. “Inflation pressures may persist in the short-term but is expected to decline in 2024.”

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

The CBN Governor further stated that the unification of the exchange rate windows in June had led to a new approach to exchange rate management 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 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,” he said.

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.

According to the CBN Governor, this represents a positive trade balance, which will increase the external reserves.

Mr Cardoso, however, said that due to domestic prevailing factors, less revenue would be earned from oil exports in 2024.

“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,” he said.

Earlier, the chairman of the Joint Committee, Senator Tokunbo Abiru, said the interactive session was organised for a statutory briefing by CBN, in line with extant laws.

The co-chairman of the committee, Mohammed El-Rufai, commended Mr Cardoso and the apex management team on measures to stabilise the nation’s economy. (NAN)

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