A new report has said likely stronger dollar demand will convince the Central Bank of Nigeria of the need to tighten monetary conditions as with the trend across global central banks to manage foreign exchange reserve depletion.
Sigma Pensions said this in the report titled ‘Nigeria 2022 outlook: Consolidating on recovery but persisting large imbalances present headwinds’.
According to the report, the large fiscal borrowing requirements amid less liquid financial system conditions in 2022, relative to the last two years, suggest ample scope for heightened market expectations about higher interest rates.
According to the report, a large fiscal borrowing plan and higher political risk premiums are expected ahead of the 2023 general elections.
The company expects the domestic institutional investor support in bellwether names to continue to curtail downside to the overall market.
