*Naira to depreciate despite CBN’s interventions
JPMorgan Chase & Co has projected that the Nigerian inflation rate will spike to 28 per cent by the end of 2023, adding the Naira will further depreciate despite innovations by the Central Bank of Nigeria (CBN) to sanitize the foreign exchange market.
JP Morgan made the disclosure in a report titled, “Nigeria: Reform pause rather than fatigue: CBN’s financial accounts open a can of worms.”
JP Morgan hinged its report on the impact of fuel subsidy removal, foreign exchange liquidity, and the recently published financial records of the CBN.
The CBN accounts exposed that net reserves fell to $3.7billion by the end of 2022 compared to $14bn recorded in 2021.
After the CBN floated the currency, the Naira depreciated to N955 on the black market and fell to N840 after a threat to hunt speculators by the CBN. At the Investors’ and Exporters’ window, the naira fell to around N770 per dollar.
Since the petrol subsidy was removed, prices of fuel rose to N617 per litre from around N190 per litre.
According to JPMorgan, petrol prices have more than doubled, and the naira has depreciated by 40 per cent against the dollar in the official market.
The ripple effect of the managed float and the fuel subsidy removal has spiked inflation, which was 24.4 per cent in July.