Financial analysts have presented a cautiously optimistic outlook for the Nigerian naira in 2026, projecting that the currency will trade within a specific band against the US dollar. The forecasts, detailed in recent economic reports, hinge on several domestic and international factors.
Baseline Scenario: Naira to Avoid Sharp Collapse
Yemi Kale, the Chief Economist at the Africa Export-Import Bank (Afreximbank), delivered a keynote address at the FirstBank Nigeria Economic Outlook 2026 event. He presented scenario-based projections for the USD/NGN exchange rate.
Kale's baseline forecast considers oil prices, foreign exchange inflows, inflation trends, and the consistency of government policies. Under this scenario, he expects the naira to remain under pressure but avoid a sharp collapse.
Specifically, he projected the naira could trade around N1,313 per US dollar by June 2026 and approximately N1,340 by December 2026. This outlook assumes moderate improvements in Nigeria's FX reserves, stable Central Bank policies, a gradual decline in inflation, and no major external economic shocks.
A Slightly More Optimistic View from CardinalStone
In a separate report titled 'Indicators Align for Sustained Macro Gains,' financial firm CardinalStone Partners offered a nuanced perspective. The firm predicts the naira could strengthen to a range between N1,350 and N1,450 per dollar in the coming year.
This potential strengthening is attributed to anticipated improvements in Nigeria's macroeconomic fundamentals, higher foreign exchange liquidity, and a moderating inflation rate. However, the report also issued a warning.
It highlighted that risks from global oil market volatility and persistent domestic insecurity could still negatively impact the currency's stability. Analysts noted that lower global crude oil prices could reduce Nigeria's dollar earnings, thereby putting weight on the naira.
Potential Benefits and the Path to Stability
Beyond the direct exchange rate predictions, experts pointed to broader economic implications. CardinalStone suggested that a more resilient foreign exchange outlook could lead to reduced domestic energy costs.
This would particularly affect the prices of Automotive Gas Oil (AGO) and Premium Motor Spirit (PMS), which are crucial for transportation and industrial operations across the country.
Both Kale and CardinalStone emphasized that the path to currency stability relies heavily on consistent policy implementation. They described the overall outlook as cautiously optimistic.
Key to sustaining confidence in the naira will be continued structural reforms in the foreign exchange market, careful monitoring of inflation and FX inflows, and sound macroeconomic management by authorities.
The forecasts collectively suggest that with prudent policy measures and favorable market conditions, the naira could achieve relative stability in 2026. This would provide much-needed relief to Nigerian businesses and households that have been grappling with currency volatility.
This outlook follows a period of recovery for the naira at the end of 2025, where it appreciated by over N100 against the dollar, closing the year at N1,485/$1 compared to N1,650/$1 at the end of 2024.
