Market News

The Nigerian naira is projected to depreciate to a weighted fair value of N1,804.45 in the coming year as tendency of volatility persists.

This is according to a new report by Lagos-based investment and research firm Afrinvest titled ‘Beyond The Rhetorics: Transforming Reforms to Tangibles.

The research company revealed that while the gross foreign reserves have risen above $40 billion, “we anticipate that exchange rate volatility would persist in 2025 albeit at a modest pace.”

“Our prognosis is hinged on the belief that the CBN would be constrained from adequately meeting market demand on a sustained basis, as the recent FX reserves accretion were largely driven by inflows from inorganic sources, including those with stringent conditions on usability,” it said.

This prediction comes against the backdrop of the nation’s 2025 budget which assumes that the exchange rate would steady at N1,400 against the dollar.

The naira closed on a positive note this week though strengthening from N1,548.40/$1 as at the eve of Christmas to N1,534/$1 on Friday, 27th December, according to data compiled from the FMDQ Securities.

The local currency has had its steepest fall in 2024, plunging to almost N2000 against the greenback on the street in February while trading at about N1,700 on the official window.

This was the aftermath of the radical reforms implemented by the federal government – floating the currency and a two time devaluation of the naira has seen the local unit lose over 40 percent of its value year to date.

In recent times, the market has been relatively stable and transparency has been restored on the back of the FX BMatch introduced in October.

Economists have said the sustenance of the EFEMS and a more expansive net reserves could party ease the pressure on the naira.

Analysts at Afrinvest however stated that the naira may appreciate should there be more inflows and liquidity, especially from crude oil exports and remittances.

“Notwithstanding, we do not rule out the possibility of a significant rebound in the Naira, especially if accretion from organic sources-crude oil & non-crude oil exports, foreign capital flows, and diaspora remittances- takes significant leap,” the report stated.