The Nigerian naira is projected to reach N1,804/$ in 2025, reflecting continued volatility despite rising foreign reserves. Afrinvest predicts modest depreciation due to market demand challenges. The 2025 budget assumes an exchange rate of N1,400/$, but the naira may stabilize with increased oil exports and remittance inflows.
The Nigerian naira is projected to depreciate to a weighted fair value of N1,804.45 per US dollar in 2025, according to a report by the Lagos-based investment firm Afrinvest. This projection highlights ongoing volatility in the exchange rate, despite the country’s rising foreign reserves, which have recently surpassed $40 billion. Afrinvest predicts that exchange rate fluctuations will persist in 2025, though at a modest pace. The firm attributes this to the Central Bank of Nigeria (CBN) being unable to consistently meet market demand due to foreign exchange inflows being mainly from inorganic sources with stringent usability conditions.
This forecast comes as Nigeria's 2025 budget assumes a stable exchange rate of N1,400 to the dollar, despite the naira experiencing steep depreciation in 2024. By December 27, the naira had slightly strengthened, trading at N1,534/$1 from N1,548.40/$1 at Christmas. Earlier in the year, the naira plunged close to N2,000 against the US dollar due to radical reforms, including the floating of the currency and two devaluations, leading to a 40% loss in value.
Afrinvest analysts suggest that the naira could stabilize or appreciate if there is an increase in inflows, particularly from crude oil exports, remittances, and foreign capital flows. Additionally, the sustained implementation of the EFEMS (Foreign Exchange Matching System) and a more extensive reserve base could help ease pressure on the local currency.
