The Naira is projected to depreciate to N1,804 per dollar in the official market by 2025, according to a new report by Afrinvest titled “Beyond The Rhetorics: Transforming Reforms to Tangibles.”
The Nigerian government’s 2025 budget projections for expected foreign exchange (forex) earnings, however, suggest a much lower value.
The report highlights ongoing foreign exchange (FX) volatility and the challenges faced by the Central Bank of Nigeria (CBN) in meeting forex demand as key factors driving the anticipated depreciation.
Afrinvest’s analysis indicates that the CBN may struggle to maintain market demand for forex due to a dependence on inflows from inorganic sources, many of which come with stringent conditions that limit their usability.
“We anticipate that exchange rate volatility would persist in 2025, albeit at a modest pace,” the report stated.
“Our prognosis is hinged on the belief that the CBN would be constrained from adequately meeting market demand on a sustained basis, as the recent forex reserves accretion was largely driven by inflows from inorganic sources.”
This projection sharply contrasts with the N1,500 per dollar benchmark proposed in the 2025 budget currently under review by the National Assembly.
Despite the grim forecast, the Naira showed signs of resilience last week. As of Friday, the currency appreciated in the official market, closing at N1,534 per dollar while trading at N1,650 on the parallel market.
Dr. Olusegun Ajayi, an economist and forex specialist, believes the Afrinvest projection highlights deeper issues within Nigeria’s forex management system.
“The projected depreciation of the Naira to N1,804 per dollar reflects a lack of structural reform in Nigeria’s forex policy. Unless the CBN diversifies its forex sources and strengthens reserves through organic means such as export revenue, the currency will remain vulnerable to external shocks,” Ajayi said.
Financial analyst and Afrinvest contributor, Ahmed Usman, pointed out the disparity between the government’s optimistic budgetary benchmark and the reality of market forces.
