Naira Slides Amid Bullish Economic Growth Estimates, Robust FX Reserves
The Nigerian local unit, the naira, lost N9.43 per US dollar at the official window amid sustained FX liquidity shortages and a growing foreign reserves deficit, according to Central Bank data.
The naira weakened amidst a 4.1% economic growth projection for 2026. Just recently, the International Monetary Fund (IMF) estimated that Nigeria’s economy will grow by 4.1% in 2026.
The fund also said the country’s gross domestic product will further accelerate to 4.3% in 2027, underpinned by improving macroeconomic stability, ongoing economic reforms, and favourable terms-of-trade effects.
While the outlook reflects growing confidence in Nigeria’s economic recovery, the Fund cautions that elevated food and energy prices will continue to weigh on household purchasing power, exacerbating poverty and food insecurity despite stronger output growth.
Globally, the IMF expects economic growth to moderate to 3.0% in 2026 before improving to 3.4% in 2027, compared with an average of 3.5% recorded during 2024– 2025
At the official market, the currency depreciated by 0.68% week-on-week to close at ₦1,379.62/US$, while it appreciated by 0.29% in the parallel market to settle at ₦1,379.07/US$.
The market remains bullish on the naira due to growing foreign reserves, while analysts said the absence of the Central Bank FX injections signals almost total recalibration of the local currency against the dominant US dollar.
Data obtained from the Apex Bank showed that Nigeria’s external reserves increased by 0.21% week-on-week to US$51.74 billion, reflecting an improvement in the country’s external liquidity position.
Meanwhile, crude oil prices remained under pressure amid renewed geopolitical concerns. The International Energy Agency (IEA) warned that escalating U.S.-Iran tensions could alter the global oil market outlook despite the recovery in oil flows through the Strait of Hormuz.
Although crude supply has improved and benchmark prices have moderated, refined fuel markets remain relatively tight, according to Cowry Asset Limited. US WTI crude declined by 0.55% to US$71.68 per barrel, while Brent crude edged higher by 0.24% to US$76.12 per barrel.
Investment firm Cowry Asset Management Limited expects the naira to remain broadly stable, supported by sustained foreign exchange interventions, improved external reserves, and relatively healthy FX liquidity.
However, persistent global uncertainties, particularly developments surrounding U.S.-Iran relations and their implications for crude oil prices, will remain key drivers of investor sentiment and foreign exchange inflows.
“We also expect oil prices to remain volatile in the near term as market participants continue to assess geopolitical developments alongside evolving global supply and demand dynamics”, the firm said.
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