The current market bias for the USD to NGN exchange rate is bearish.
Key drivers include a projected decline in the U.S. dollar due to expected Federal Reserve rate cuts and improving global growth, which may increase currency volatility. Additionally, Nigeria's inflation is expected to rise significantly, influencing the naira's value.
In the near term, the USD to NGN is likely to trade in a stable range, reflecting recent lows near 1,424, with fluctuations from this level expected over the next few months.
Upside risks for the naira could arise from positive developments in oil production, which is critical for Nigeria's economy. Conversely, a downside risk includes the potential for global economic uncertainties to further weaken the naira against the dollar, especially if inflation trends follow projections.
Oil prices are also experiencing volatility, with recent declines indicating potential impacts on the Nigerian economy and, ultimately, on the naira's strength.
