Financial Derivatives Company Limited researchers have noted that several domestic commodity prices are steadily declining due to the naira’s recovery in relation to the dollar and other major currencies.
Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, stated in an email report sent to investors over the weekend that the naira had recovered to N1,260/$ and N1,125/$ at both the official and parallel markets.
The costs of some food goods have started to rise with the steady naira appreciation, as was generally anticipated.
Rewane said:
“Notably, prices of some commodities like rice (50kg) decreased by 5.26 per cent to N90,000, sugar fell by 5.88 per cent to N80,000/bag, flour experienced a decline of 7.81 per cent to N59,000/bag, and noodles (carton) witnessed a significant decrease of 15.22 per cent to N7,800/carton.”
He clarified that pricing will probably reflect the appreciation of the naira as more companies start to stock up on inventories.
He added:
“In the short term, we anticipate further moderation in commodity prices as the naira sustains recovery due to improved forex supply. Consequently, inflationary pressure is expected to slow in the coming months.”
Since the naira touched an all-time low of N1,915/$ in February at the parallel market, the Central Bank of Nigeria (CBN)’s recent foreign exchange (FX) market sanitisation policy has put the currency on a steady route to recovery.
The increase in foreign exchange inflows and the CBN’s selling of dollars to bureaux de change (BDCs) contributed to the exchange rate recovery. The amount invested in foreign portfolios has increased to $2.3 billion in the first two months of 2024.
According to Rewane, clearing the apex bank’s $7 billion in certified foreign exchange backlog was a significant accomplishment.
With this accomplishment, CBN Governor Olayemi Cardoso keeps his pledge to deal with the backlog.
By reducing the backlog, CBN is advancing its continued policy objectives to stabilise the currency rate, reduce import inflation, and increase economic confidence.
He said:
“The recent clearance of the FX backlog by the CBN marks a pivotal moment for the nation’s economy, carrying profound implications for several key macroeconomic indicate,”
Dr. Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), observed that the market’s continuous evolution demonstrated its readiness to correct itself with a realistic price discovery as the naira keeps appreciating on a global scale thanks to the CBN’s policies encouraging more foreign exchange inflows.
