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The naira is projected to trade within a range of N1,290 to N1,370 per dollar through October, as easing inflation, strong foreign exchange reserves and seasonal demand for imported goods shape the outlook for Nigeria’s currency market.
The projection comes amid the Central Bank of Nigeria’s (CBN) decision to reset its Monetary Policy Rate (MPR) to 23 per cent, alongside expectations of increased demand for foreign currency as businesses prepare for the Christmas and New Year festivities.
Financial analyst Olumide Adesina projected that the naira will trade between N1,290 and N1,370 per dollar through October, as strong foreign exchange reserves and easing inflation support the currency despite rising demand for dollars ahead of the festive season.
Adesina said the exchange rate was expected to remain within the projected range, with the Central Bank of Nigeria’s reduction of its benchmark interest rate to 23 per cent and seasonal import demand limiting the potential for significant appreciation.
Other economists suggest that these competing forces could keep the naira relatively stable in the near term, although gradual depreciation remains a risk if demand for dollars outpaces available supply.
Businesses typically increase imports towards the end of the year to replenish inventories, meet consumer demand and purchase raw materials. These activities increase demand for dollars to settle international transactions, potentially putting pressure on the naira.
For manufacturers and import-dependent businesses, any sustained increase in foreign exchange demand could raise operating costs and eventually feed into domestic prices.
Biodun Odunuga, an analyst with Capital Trust in Lagos, noted that the naira’s performance will depend partly on the balance between foreign currency inflows from oil exports and investment, and demand from importers, manufacturers and consumers.
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