Analysts at Fitch Solutions’ research arm, BMI, have forecasted that the Central Bank of Nigeria is likely to keep the naira stable at around N1,650 per dollar through 2024, despite mounting pressure on the exchange rate.
The analysts expect the currency to gradually depreciate to around N1, 750 naira per dollar by the end of 2025, due to the widening gap between Nigeria’s official and parallel market rates.
BMI’s latest report, titled “Fiscal Risks in SSA Persist Despite Return to Capital Markets,” highlights that while the CBN might ease its strict hold on the naira, it is unlikely to allow the currency to drop as sharply as in recent years.
“We expect a more controlled approach this time around,” the report stated, reflecting lessons learned from prior currency challenges in 2023.
BMI said that increased domestic fuel production was a key factor supporting the stability of the naira.
“This domestic fuel production reduces Nigeria’s dependence on foreign exchange for gasoline imports, reducing the need for dollars and helping to maintain the stability of the naira.
“By reducing the need for dollars, the Dangote Refinery’s production will play a key role in boosting Nigeria’s foreign exchange reserves, thereby providing additional stability to the naira,” BMI analysts noted.
They further said that CBN’s strategic approach will balance investor confidence with inflation control, avoiding sharp naira depreciation.
The naira closed at N1, 678 per dollar in the official market on Friday, holding steady after a record low set on Thursday.
However, wide fluctuations between N1, 609 and N1, 698 per dollar reflect the ongoing demand pressure, with even higher rates in the parallel market, reaching up to N1, 730 per dollar.
This disparity highlights Nigeria’s foreign exchange liquidity challenges as businesses and consumers seek dollars through alternative channels.
The CBN continues to face tough challenges, including low foreign reserves, fluctuating oil revenues, and inflationary pressures, in its effort to stabilize the naira.
