Afrinvest Report Warns of Continued Forex Challenges for Nigeria
The Nigerian Naira could depreciate to a fair value of N1,804 per dollar at the official market in 2025, according to a report by Afrinvest titled Beyond The Rhetorics: Transforming Reforms to Tangibles.
The report highlights concerns that the Central Bank of Nigeria (CBN) may struggle to meet foreign exchange (FX) demands in the coming months, leading to anticipated volatility in exchange rates.
“We anticipate that exchange rate volatility would persist in 2025, albeit at a modest pace,” the report noted. It attributed this outlook to limited FX reserves, which have been bolstered recently by inflows from inorganic sources with restrictive usability conditions.
The projected depreciation surpasses the N1,500 per dollar benchmark set in the 2025 budget proposal currently under review by the National Assembly.
In contrast to these forecasts, the Naira recently showed signs of strength. Reports on Friday indicated the currency closed at N1,534 per dollar in the official market and N1,650 in the black market. This improvement followed the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in October, which brought relative stability to the forex market.
Despite this stability, Afrinvest’s analysis suggests persistent structural challenges could undermine the Naira’s performance in the long term, calling for sustained economic reforms to address these issues.
