USD/NGN Outlook: Bearish, as the rate is below its recent average and near recent lows due to tariff concerns impacting the US dollar.
Key drivers:
• Rate gap: The US Federal Reserve is likely to implement rate cuts, contrasting with the Central Bank of Nigeria's focus on stabilizing the naira.
• Risk/commodities: Oil prices are trading above average levels, which could support the naira given Nigeria's dependency on oil revenues.
• One macro factor: The CBN is prioritizing exchange rate stability, aligning with their projections for modest growth and controlled inflation.
Range: The USD/NGN is expected to hold within the recent range, with a tendency to drift near the lows.
What could change it:
• Upside risk: A significant rebound in the US dollar resulting from strong economic data could pressure the naira.
• Downside risk: Continued negative impacts from political uncertainty in the US or a drop in oil prices could weaken the naira further.
