USD/NGN Outlook:
The USD/NGN exchange rate is likely to decrease as it currently sits below its recent average and nears recent lows, pressured by various factors including falling oil prices.
Key drivers:
• Rate gap: The Federal Reserve's cautious stance on interest rate cuts contrasts with Nigeria's improved economic outlook, which is supporting the naira.
• Risk/commodities: Oil prices have rebounded significantly above their recent average, providing a boost to the Nigerian economy and supporting the naira amid higher oil export revenues.
• Economic outlook: Increased foreign exchange inflows and a focus on stability by the Central Bank of Nigeria are contributing to the naira's strength.
Range:
The USD/NGN rate is expected to move within a relatively narrow range, holding steady despite recent volatility.
What could change it:
• Upside risk: A significant rebound in global oil prices could further support the naira's value.
• Downside risk: Weaker-than-expected economic data from the U.S. could lead to a stronger USD, increasing selling pressure on the naira.
