Nigeria’s exchange rate is expected to strengthen as inflation drops in 2024, says Bismarck Rewane, Parthian Partners’ non-executive director and Managing Director of Financial Derivatives Co Limited. He made this known during Parthian Partners 2024 Economic outlook session which took place on Tuesday, 12 December 2023 in Lagos.
According to Mr. Rewane, “Inflation is likely to drop in 2024 and could go as low as 17 percent in 2025. Once inflation begins to decline, the exchange rate naturally appreciates because the exchange rate pass-through starts slowing down.” However, he noted that inflation will continue to rise in early 2024 due to market reforms and persistent currency volatility on the black market. “Base effects are expected to kick in by mid-year, with inflation moderating to an average of 23.6 percent in 2024 from an average of 24.4 percent in 2023.” The decline in inflation will naturally lead to exchange rate appreciation, he said.
Mr Rewane also provided key perspectives on the current economic landscape, highlighting trends, challenges, and opportunities for the upcoming year. While analysing the economic trends, he noted that the Naira fell by 26 per cent to N1050/$ in 2023. “There were higher energy prices with Diesel price up by 34.01 percent to N1050 per liter (year-on-year), fuel price up by 233 percent to N630 per liter (year-on-year), while money supply growth went up 36 percent (year-on-year) to N67.18trn in September,” he said.
His thorough analysis delved into crucial factors such as GDP growth, inflation rates, and employment trends, offering a well-rounded understanding of the economic landscape. Additionally, he highlighted investment in Nigeria as a major driver contributing significantly to the country’s GDP.
Mr Rewane also recognized the interconnected nature of today’s global economy, highlighting that Nigeria has a lot of international factors that could influence the trajectory of the economic outlook in 2024. This includes considerations of geopolitical events, trade dynamics, and emerging market trends, artificial intelligence.
While he dwelled on artificial intelligence and the rapid change the world is facing, he backed up his point by stating that “The world has changed; artificial intelligence and social media have made it easy. Now, there are no queues at banks, because all you need is your app.”
He stated that “Investors are expected to deepen positions in securities that offer higher yields and companies with quality cashflows and realistic earnings goals.” Commenting further, he highlighted a salient point for investors; he stated that “Before you invest in a country, be sure that the indigenes are also investing in that country.”
Parthian Partners organised the 2024 Economic outlook session as part of its value-added services to clients with a view to providing a valuable resource for businesses, investors, and policymakers seeking strategic guidance for the coming year.
At the same event, Mr Seun Dosunmu, Head of Research at Parthian Securities, a subsidiary of Parthian Partners, gave insight into the equities market, highlighting trends that will be replicated in 2024. In his analysis, he advised investors to expect a high interest rate environment, recapitalization of the banking industry, capital raising by some listed companies, mergers and acquisitions in the banking industry, prospective energy capacity increase, among other factors. He also mentioned some likely listings for 2024 being Dangote Foods, Dangote Refinery, and NNPC.
Parthian Partners is Nigeria’s first interdealer broker, licensed by the Securities and Exchange Commission (SEC) to provide brokerage services to market dealers and investors, including pension fund administrators, fund managers, banks, and international financial institutions. With a focus on excellence, Parthian Partners plays a key role in driving economic development and creating value for stakeholders.
From 2013 to date, Parthian Partners has facilitated over ₦5 trillion in FGN bonds and treasury bill trades, and over $1.2 billion in Eurobond transactions.
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