After 31 months of an effective fixed official exchange rate of N305/$ on the CBN’s website, it was changed from a numeric rate to a comment – “the naira exchange rate is now market determined”. Before analysts and investors could decipher what it meant, it was gone. Many analysts saw it as a disappearing act (now you see me, now you don’t). The original official rate was back. The CBN went further to deny false speculation about attempts to float the naira. However, the exchange rate used for computing the custom duty was adjusted to N326/$ from N305/$. This will boost government revenue and reduce the fiscal impact of the minimum wage.
Also, earlier today, the inflation report was released by the National Bureau of Statistics. For the second straight month in 2019, Nigeria’s headline inflation in the month of May increased, albeit marginally by 0.03% to 11.40%. This reflects the seasonal fall in food supply as evidenced by the slight increase in food inflation (13.79%). The good news however, is that the core sub-index (inflation less seasonality) declined by 0.3% to 9.0%.
Import substitution and export promotion strategies, have been critical elements of economic growth strategies to boost agric production and food processing. Also benefitting from the diversification strategy of the government is Nollywood since early 2000.
In this edition of the FDC Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and investment decisions.
Do enjoy your read…