Recent forecasts for the USD to NGN exchange rate suggest a variety of economic influences at play. The US dollar has faced downward pressure amid stable inflation readings and potential shifts in Federal Reserve leadership. Analysts noted that the core PCE price index, reflecting August's inflation at 2.9% year-on-year, has impacted expectations for future interest rate adjustments. With a lack of significant US economic data releases, market sentiment is also swayed by ongoing US-China trade tensions and the implications of Trump's tariff announcements.
In Nigeria, key developments have significantly impacted the Naira's outlook. The Central Bank of Nigeria recently cut its key lending rate by 50 basis points, the first reduction since 2020, aiming to spur economic growth. This move, alongside a decrease in the overnight lending rate due to increased liquidity and a new monetary policy direction, may provide some support for the Naira. However, challenges remain, particularly with the Dangote Petroleum Refinery halting fuel sales in Naira, which could exacerbate inflationary pressures and negatively influence the currency.
Looking at the current exchange rate, the USD to NGN is trading at 1485 NGN, which is 2.4% below its three-month average of 1521 NGN. This relative stability suggests that market participants are adjusting to recent monetary policy changes in Nigeria and fluctuating sentiment regarding the US dollar. Additionally, oil price movements are pertinent to this forecast, as oil prices are currently at 90-day lows near 65.35 USD, 4.0% below their three-month average. Given that Nigeria is heavily reliant on oil revenues, any further decline in oil prices could adversely affect the Naira, complicating the exchange rate outlook against the USD.
Overall, currency experts and analysts will continue to monitor these evolving economic indicators and geopolitical developments to gauge the future trajectory of the USD to NGN exchange rate.
