The USD to NGN exchange rate is currently experiencing notable fluctuations influenced by both domestic and international economic factors. As of recent data, the exchange rate sits at around 1501 NGN per USD, marking a 2.0% decline from its three-month average of 1531 NGN. This is the lowest level observed in the last 90 days, with the dollar trading in a stable range of 1501 to 1551 NGN.
Recent developments affecting the US dollar include mixed consumer sentiment data from the University of Michigan, indicating weaker household morale than anticipated, which may limit further gains. Additionally, the USD outlook is affected by ongoing uncertainties surrounding the Federal Reserve's upcoming interest rate decision, alongside developments in US-China trade negotiations and the anticipated release of U.S. Consumer Price Index (CPI) data. Analysts suggest these factors will contribute to a cautious trading environment for the dollar.
For the Nigerian naira, significant challenges persist. The International Monetary Fund has recommended that Nigeria revise its 2025 fiscal budget due to lower oil prices, with current figures around $68 per barrel, below previously assumed levels. This decline is critical as Nigeria remains heavily reliant on oil revenues. The naira has depreciated by 70% due to economic reforms, yet recent data indicate projected growth of 4.6% for 2024, following the removal of fuel subsidies.
Despite these growth prospects, the African Development Bank projects a 6% depreciation of the naira through 2026 amid global market volatility and ongoing inflationary pressures. Further complicating the naira's stability are government enforcement measures regarding currency practices at social events and requests for external borrowing to support economic reforms.
As oil prices remain volatile, with recent trading at $66.91—2.8% below its three-month average—market analysts emphasize that fluctuations in oil will continue to significantly impact both the USD and NGN exchange rates. Potential upward adjustments in oil prices could provide some support for the naira, while persistent low prices could exacerbate its challenges. For businesses and individuals engaging in international transactions, the current climate suggests heightened caution is advisable, with ongoing developments likely to contribute to continued exchange rate volatility.
