Comment: Sentiment Over Nigeria Continues to Improve

‎FXTM Research Analyst Lukman Otunuga on Inflation Rate.
 
Nigeria has once again revealed to the global arena that it remains on a steady path to recovery, as the nation’s rate of inflation slowed for the seventh successive month in August.

Annual inflation eased to 16.01% in August, compared with 16.05% in July, pointing to signs of improving price stability.

With consumer prices stabilizing, and slowly edging towards the Central Bank of Nigeria’s 6-9% inflation target, inflationary pressures may eventually become a thing of the past.

Sentiment over Nigeria as a whole continues to improve, and I believe the combination of accelerating growth & falling inflation should prompt the CBN to cut benchmark interest rates in the future.

The Naira depreciated against the Dollar on Thursday, with prices currently trading at N369.

Nigeria’s improving macro fundamentals do prompt the question whether the Naira is currently undervalued against the Dollar.

If the Dollar continues to weaken amid fading rate hike expectations, the Naira is likely to find support and gain ground against the Greenback.