Market News

By Oluwakemi Abimbola

Investment company Comercio Partners has projected that the naira is expected to drop to about 1,700/$ at half-year.

This was revealed during the presentation of its 2025 macroeconomic outlook titled ‘Looking Forward to the Future’ at its head office in Lagos on Friday.

The naira has been strengthening in recent times, enabling businesses to plan. Central Bank of Nigeria data showed that the naira closed Friday at 1,500.41/$.

“Nigeria’s reliance on fuel imports has remained one of the primary drivers of dollar demand, placing persistent pressure on the naira. The economy’s limited capacity to generate sustainable dollar inflows through exports further exacerbates currency instability. Moreover, fiscal policy often fails to align with monetary efforts, creating a fragmented approach to economic management. These structural deficiencies limit the effectiveness of short-term measures and contribute to the naira’s vulnerability to external shocks.

“While Eurobond issuances provide temporary relief to Nigeria’s exchange rate challenges, their impact is fleeting in the absence of structural economic reforms. The CBN’s interventions, including EFEMS and rate adjustments, demonstrate the potential for short-term stabilisation but fall short of addressing the naira’s underlying vulnerabilities. As Nigeria moves into 2025, the combination of reduced fuel imports, improved investor confidence, and high-yield investment opportunities creates a pathway for stability. We project that the naira will close the first half of 2025 (at) N1,700-N1800 per dollar. However, only a holistic, coordinated effort between monetary and fiscal authorities can ensure sustained currency appreciation and broader economic resilience in the years ahead,” part of the report read.

The Chief Executive Officer of Comercio Partners Capital, Stephen Osho, said that he expects the naira to strengthen later in the year.

He attributed this optimism to several factors, including the clarity provided by the CBN regarding the clearance of foreign exchange backlogs. “This has been one of the challenges we’ve faced in terms of supply shortages,” he explained.

This is in addition to an increase in FX inflows, which has improved liquidity in the market, and the introduction of the Electronic Foreign Exchange Matching System in December.

Speaking on the projection, the Head of Investment Research at Comercio Partners, Dr. Ifeanyi Ubah, said, “The report also shows that investors have been favouring more foreign portfolio investors because of the high-interest rate environment while neglecting foreign direct investments. If we are looking at pushing for the $1tn economy, we need a shift in that dynamic. We need investors who are willing to leave their money with us for the long term. You can describe FPIs as friends with benefits, and FDIs are the ‘come and marry me’ type of money. We need more partners who want to marry us in Nigeria.”

Meanwhile, for inflation, Comercio Partners said that the rebasing of Nigeria’s Consumer Price Index would also create effects that could lead to a lower inflation figure.

Ubah said, “We expect headline inflation to decrease to around 15 per cent in the first half of 2025, indicating a gradual return to economic stability.”

The National Bureau of Statistics has announced plans to update the base year for computing the Consumer Price Index from 2009 to 2024.

“At first glance, this adjustment is expected to lower headline inflation figures, but a closer analysis reveals a more nuanced picture. While the base effect from the rebasing will reduce the CPI for 2025, it will also revise the 2024 figures downward. The resulting direction and magnitude of year-on-year inflation will hinge on the price changes within each commodity basket over the two periods.

“Given that 2024 recorded one of Nigeria’s highest inflation rates, the updated base year is likely to make subsequent price index figures appear relatively lower. With no immediate catalysts for a significant inflation spike in 2025, this statistical adjustment aligns with expectations of declining inflation trends. Additionally, the reduced weightings for key inflation drivers, particularly food and energy, reinforce the likelihood of a substantial drop in inflation. This strengthens our case for the forecast of Nigeria’s inflation dropping significantly by mid-2025,” the report added.