Bias: Bearish-to-range-bound, as the USD/NGN is below the 90-day average and in the lower half of the recent 3-month range.
Key drivers:
- Rate gap: The Federal Reserve's potential rate cuts may reduce USD demand, while the Central Bank of Nigeria is focused on stabilizing the naira, supporting its value.
- Risk/commodities: Oil prices are above average, which typically strengthens the naira, given Nigeria's dependence on oil revenue.
- Economic growth: Nigeria's projected economic growth of nearly 4.5% in 2026, combined with easing inflation, contributes to a more favorable outlook for the naira.
Range: The USD/NGN is likely to drift within its recent range as external pressures and domestic policies influence movement.
What could change it:
- Upside risk: A sudden increase in oil prices could significantly boost the naira against the dollar.
- Downside risk: If the Federal Reserve signals more aggressive rate cuts, it may weaken the USD further.
