Afrinvest projects the naira will depreciate to ₦1,804.45/$ in 2025, despite foreign reserves exceeding $40 billion.
The report warns of continued volatility due to structural challenges and limited CBN interventions, with recovery dependent on increased exports and remittances.
Lagos-based research firm, Afrinvest predicts that the Nigerian naira will weaken further, potentially reaching ₦1,804.45 to the US dollar in 2025.
The report, Beyond the Rhetorics: Transforming Reforms to Tangibles, explains that exchange rate volatility will likely persist, even though Nigeria’s gross foreign reserves have risen above $40 billion.
Afrinvest highlights that the Central Bank of Nigeria (CBN) will struggle to meet sustained market demand for foreign exchange.
This is because recent reserve increases have been driven by inflows with strict conditions on their usability.
In contrast, the federal government’s 2025 budget assumes a more stable exchange rate of ₦1,400 to the dollar.
The naira has endured a volatile 2024, plunging to nearly ₦2,000 on the parallel market in February and losing over 40% of its value after reforms such as floating the currency and implementing two devaluations.
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Nevertheless, by late December, the naira recovered slightly, strengthening to ₦1,534/$1 from ₦1,548/$1 earlier in the week, according to FMDQ data.
To address these challenges, policymakers introduced the FX BMatch platform in October, which improved market transparency and brought relative stability.
As a result, economists suggest that maintaining reforms and expanding net reserves could help ease pressure on the naira.
Despite these difficulties, Afrinvest remains optimistic.
The firm believes that if organic foreign exchange inflows, including crude oil exports, foreign investments, and remittances, increase, the naira could experience a strong rebound.
“A substantial rise in reserves could shift the outlook significantly,” the report concluded.
