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Naira to depreciate to N401\$ in H2’19— Afrinvest

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By Cynthia Alo

AFRINVEST Limited, a Lagos based investment firm, has projected that the naira will  depreciate to N401 per dollar in the second half of 2019 (H2’19). The  firm also projected  that Nigeria’s Gross Domestic Product, GDP, will grow by 2.5 percent  this year as  against 1.9 percent recorded in 2018. The firm made this projection  in its economic outlook for 2019 titled: “On the Precipice, of the 2019 economic outlook”.   Presenting the firms’ outlook compiled by the Chief Executive Officer, Mr. Ike Chioke, the Deputy Managing Director, Afrinvest, Victor Ndukauba said: “Overall, we believe the exchange rate will remain stable, especially in H1’19, since the CBN has ample reserves for interventions.

“However, we note that pressures on the currency will intensify in H2:2019. Hence, we may see depreciation in the currency to N401 per dollar, mirroring the rate of 12-month non-deliverable forwards quoted on Bloomberg. We note that the likely emergence of a new CBN governor by mid-2019 may result in a new exchange rate policy.”

On possibility of the exchange rate of breaching the resistance levels in 2019, Ndukauba said: “The exchange rate stability which we anticipated was achieved for most of 2018.

Indeed, Naira devaluation is probably the most potent weapon against the prosperity of Nigerians. Nigeria’s migration from a potential industrial power house with bustling social affluence, to a subdued and stumbling economy clearly began with the adoption of IMF’s Structural Adjustment Programme during Babangida’s regime: the chorus from International Agencies, at that time, was also that falling oil prices with an unserviced debt burden and the consequent restriction of trade credit to Nigeria, were the products of an allegedly overvalued Naira exchange rate.

“In 2019, the currency faces a downside risk. Foreign capital flows may remain constrained due to both political risk and elevated interest rate in advanced economies. This will heavily impact Nigeria’s external position and weaken external reserves accretion. However, the CBN has guided towards a tight monetary policy stance which should help attract capital inflows. We also expect a stable current account surplus to support reserves accretion, if oil production remains steady at 2.1mb/d as expected, and oil prices remain above $50/b.”

Naira down to N366 /$ in I&E window

Speaking on the company’s outlook for Nigeria’s GDP in 2019,  he said: “We estimate that growth will improve to 2.5 percent from 1.9 percent in 2018 based on the expectation of improved oil GDP and sustained expansion in the non-oil sector. This forecast implies that with population growing at 2.6 percent to 3.0 percent, Nigerians are projected to remain poorer on the average in 2019. We believe this growth outcome will reflect a soft rebound in agriculture, increased oil output and better performance in the services and manufacturing sectors.

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