USD/NGN Outlook:
Likely to decrease, as the rate is significantly below its recent average and nearing recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with the Central Bank of Nigeria's higher rate, which supports the naira.
• Risk/commodities: Recent upward momentum in oil prices may provide some support to the naira, which is tethered to Nigeria’s oil revenues.
• One macro factor: The CBN's reforms in 2025 have bolstered Nigeria’s foreign reserves and stability, impacting the naira positively.
Range:
Expect USD/NGN to drift within its recent range, though pressure remains towards the lower end.
What could change it:
• Upside risk: A surprise U.S. economic rebound could strengthen the dollar.
• Downside risk: Continued geopolitical tensions and weakening U.S. asset attractiveness might further diminish the dollar's value.
