The decline in oil prices and the dwindling oil revenue has set off a domino effect impacting every Nigerian regardless of their position in the economic chain. There is increasing need to preserve the value of the Naira and prevent it from plummeting even further especially with the restriction placed on the Dollar due to increased demand. Foreign exchange speculators have further exacerbated the fluctuation in the Naira through hoarding practices.
According to the National Bureau of Statistics, Nigeria’s inflation rate has risen from 9.0% recorded in May 2015 to 9.2% in July 2015. The rates are forecasted to climb to 9.83% by Q4 2015; a projected 5.3% increase in six months
The increase in the electricity tariff, the naira devaluation, new regime of import duties on imported cars, likely pressure for wage increases and a fall in global oil prices has set the stage for the anticipated marginal rise in inflation this year. This is a notion raised by the National Bureau of Statistics.
The real income of Nigerians has declined due to increase in prices of imported goods and services. The underlying threat to monetary stability causing this pressure on the Naira is not likely to end anytime soon. In fact, Bismark Rewane, a renowned Financial Analyst and the Managing Director of Financial Derivatives Company Limited predicted this as far back as May 2014 in an interview with Business Today.
According to him, “There is a probability that currency pressure will continue, as political and security spending ramps up. The macroeconomic environment has also been relatively stable, but there are other risks the new CBN governor will have to contend with. The conflicting trends of core and headline inflation since January 2014 will have to be put in perspective as well as the concerns over the eroding fiscal buffers. All of these could accentuate another speculative attack on the naira.”
More recently, Bismark has forecast further rises in inflation. With these facts and forecasts firmly in mind, how then can individuals safeguard their hard earned money?
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The Central Bank of Nigeria offer increases the monetary policy rates in order to stall inflation and mop up excess liquidity in the financial system. RenMoney’s rates are reflective of the current inter-bank and Monetary Policy rates and these rates are immediately implemented on new fixed deposits.
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The RenMoney Blogger
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