Will naira remain stable in 2025?
Analysts expect the naira to remain stable this year on the back of sustained interventions from the Central Bank of Nigeria, expected moderation in inflation and improved economic recovery. Bankole Odusanya, Treasury Chief Dealer at Polaris Bank joins CNBC Africa for more on the outlook for the local currency.
Tue, 21 Jan 2025 14:11:22 GMT
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AI Generated Summary
- Expectation for continued stability of the naira in 2025 due to interventions by the Central Bank of Nigeria and projected improvements in economic recovery.
- Risks to stability include potential impacts from developments in the US oil industry, particularly related to shale and fracking, which could affect global oil prices and inflation rates in Nigeria.
- Forecasts suggest moderation in inflation rates with the possibility of declining fuel prices if oil prices trend downward, contributing to a stable outlook for the naira.
The stability of the Nigerian naira is expected to continue throughout the year 2025, supported by sustained interventions from the Central Bank of Nigeria and anticipated moderation in inflation, alongside an improved economic recovery. Bankole Odusanya, Treasury Chief Dealer at Polaris Bank, shared insights during an exclusive interview with CNBC Africa regarding the forecast for the local currency. Odusanya emphasized that the introduction of the B-Match system on e-firms has enhanced transparency in the market, leading to stability since December 2nd. As of the recent trading session, the naira was trading around 1555 against the US dollar, with comfort projected to remain at this level. The alternative market, known as the parallel market, typically hovers around 100 naira higher than the interbank rates, creating a clear reference point for market participants. However, risks to this stability include external factors like developments in the US oil industry, particularly with potential shifts in policies towards shale and fracking. Such changes could impact global oil prices and, subsequently, inflation rates in Nigeria. Despite this, the expectation is for a moderated inflation rate due to potential declines in fuel prices if oil prices trend downward.
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