Nigeria: Naira may stabilise around $1.034 and $1.066 in near term —Experts

Zawya

a day ago

THE Nigerian National currency, naira, may stabilise around N1,600 and N1,650 in the near term, market experts have said.
This submission was made by a number of experts who weighed in on the situation of the naira earlier this month.
Renowned economist and Managing Director of Financial Derivatives Limited, Bismarck Rewane, who stated this at the June edition of the Lagos Business School Breakfast session, said that though the naira is currently undervalued at 26.82 percent, it is already approaching a fair value due to reforms.
Rewane predicts that the naira will hover between N1,600 and N1,650 per dollar, citing improved FX market convergence and reduced speculative pressures.
'The spread is now within a N50 margin, meaning the naira is now fairly priced,' he said.
He noted that the naira, though currently undervalued by 26.82 per cent is approaching a fair value due to reforms that have narrowed the gap between official and parallel market rates to within 1–3 per cent—a dramatic improvement from the 50–70 per cent disparity seen previously.
In his broader economic forecast for June and July, Rewane anticipates a slight decline in inflation to 23.15 per cent Q1 2025 GDP growth of 3.4 per cent, and Brent crude trading between $60 and $63 per barrel, driven by increased OPEC+ output.
He also projected Nigeria's oil production will rise to 1.5 million barrels per day, with petrol and diesel prices expected to drop to N845/litre and N950/litre respectively.
Additionally, he expects the CBN's Monetary Policy Committee to reduce the benchmark interest rate by 50 basis points.
Supporting Rewane's outlook, analysts at Meristem predicted relative stability for the naira, barring any sharp disruptions in foreign exchange inflows or spikes in speculative demand.
Their May market report noted the naira appreciated in the official market but depreciated in the parallel market, widening the spread to N24.25/$ from N1.69/$ in April.
This marked the first significant divergence since March 2025 and was attributed to persistent demand pressures and speculative activity amid global economic uncertainty.
On the corporate front, Rewane reported strong revenue and profit growth, especially among companies sourcing locally and leveraging domestic credit markets. Increased issuance of commercial papers, higher yields, and improved FX transparency have enhanced investor sentiment, particularly in banking, infrastructure, and energy sectors.
Cordros Capital analysts also linked the naira's recent strength to increased inflows from foreign portfolio investors, buoyed by easing global pressures and the CBN's proactive market interventions. They echoed the expectation of near-term stability as global headwinds moderate and investor interest in Nigeria's capital markets resurges.
Overall, the consensus among analysts is that the naira, while currently undervalued, is on a path to medium-term stability, supported by economic reforms, improved investor confidence, and a narrowing official-parallel market rate gap.
Despite closing at N1,553.12 to the US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, June 5, 2025, experts are optimistic that the naira will stabilise within the range of N1,600 to N1,650 in the near term.
According to data from the Central Bank of Nigeria (CBN), the naira appreciated by 2.3 per cent over the past week, up from N1,579.27/$ at the start of the week, suggesting growing confidence in the foreign exchange market.
The naira also strengthened against the dollar from the previous day's rate of N1,565.46/$.
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