KOREDE DAMIFOGO
The naira could witness modest pressure in 2026 after maintaining a rare stability this year as the Central Bank of Nigeria begins a monetary easing cycle and crude prices decline, according to Citigroup.
The local currency may weaken to between 1,650 – 1,700 per dollar by mid next year, David Cowan, Citi’s African economist, said in a note to clients on Wednesday.
“If, as we expect, inflation starts to ease next year and the CBN starts to more aggressively ease its tight monetary policy stance, we would expect some modest pressure on the naira as 2026 progresses,” Cowan said.
The CBN, on Tuesday, lowered key interest rates by 50 basis points to 27 per cent, in the first rate cut in five years, as inflation begins to taper off. It also signalled that more cuts should be made if the disinflationary trajectory is maintained.
Prices in Africa’s top crude oil producer slowed for the fifth straight month in August to 20.12 per cent from 21.9 per cent in the prior month, buoyed by slowing food and energy prices after months of sharp rise.
The stability of the naira, which has appreciated by almost 4 per cent so far in 2025, also contributed to the cooling prices. But Citi noted that potential weakness in oil prices next year could weigh on Nigeria’s FX earnings and amplify the pressure on the naira.
The year-long rally, which saw the currency climb to a more than seven-month high, has been supported by stronger oil exports, CBN’s dollar interventions, and portfolio inflows into the bond market, with the naira quoted at N1,490.4 per dollar on Wednesday.
This contrasts sharply with 2024, when the naira depreciated by more than 40 per cent following market reforms, including the scrapping of fuel subsidies and FX liberalisation, introduced by President Bola Tinubu two years ago.