Nigerian businesses are bracing for further naira depreciation in the coming months but remain cautiously hopeful for a potential recovery by May 2025, as indicated in the Central Bank of Nigeria’s (CBN) latest Business Expectations Survey (BES).

This survey reflects immediate challenges alongside longer-term optimism for currency stabilization.

In recent months, sharp price hikes for goods and services have put pressure on consumers and businesses alike, driven largely by fuel price surges and ongoing naira depreciation. Companies acknowledge that price adjustments have become necessary to stay afloat, with importers warning that future imports could become costlier due to expected currency declines.

The CBN survey indicates that businesses foresee continued naira depreciation through late 2024 into early 2025, attributing this to persistent dollar shortages, high inflation, and the country’s reliance on imports.

Respondent firms specifically pointed out the challenges faced by sectors heavily dependent on dollar-denominated imports, which have seen increased operational costs erode profit margins. Manufacturers and other import-reliant industries anticipate further price increases for raw materials and essential inputs, potentially impacting consumers through rising prices.

However, the BES also highlighted a glimmer of hope, with some businesses expecting the naira to strengthen by mid-2025, possibly around May. Analysts suggest this optimism may stem from expectations of stronger economic reforms, higher oil revenues, foreign investments, and stabilizing policies by the CBN.

CBN initiatives, including prioritizing foreign exchange for key sectors and promoting non-oil exports, are viewed as potential measures that could stabilize the naira over time. Still, businesses are preparing for elevated operational costs, and many have started transferring these expenses to consumers, which could sustain inflationary pressures and further strain household budgets.

Despite various reforms pushing external reserves past $40 billion, the naira has still depreciated by 45% as of November, with demand pressures continuing to impact the exchange rate.