Standard Bank Revises Naira Forecast, Predicts N1,585.5/$1 by End of 2025 Amid Economic Shifts

Standard Bank has revised its outlook on the Nigerian naira, projecting that the currency will close 2025 at N1,585.5 per US dollar, a modest depreciation of 3.1% compared to current levels but stronger than its earlier forecast of N1,697.5/$1. The adjustment reflects new market dynamics and signals a more stable trajectory for the naira than previously anticipated.

According to the bank’s latest report, recent developments in Nigeria’s foreign exchange market and wider macroeconomic environment have prompted a re-evaluation of earlier predictions. The bank noted that the Central Bank of Nigeria’s improving forex reserves could play a key role in cushioning the naira against excessive volatility, even as political and economic headwinds persist.

Looking ahead, Standard Bank highlighted that Nigeria’s 2027 general elections could trigger new pressures on the currency. With campaign activities expected to kick off in early 2026, the report warns of rising fiscal spending and increased dollar demand, both of which could weaken the naira in the medium term. The bank projects the currency could settle at around N1,692.6 by December 2026, with election spending seen as a major driver of exchange rate volatility.

On the trade front, the report pointed to a sharp decline in oil exports due to increased domestic crude sales, particularly after the Dangote Refinery began operations. While petroleum imports have dropped to their lowest level in 17 quarters, non-oil imports surged by 24.1% in Q4 2024, pushing total imports up by 9.3% to $10.05 billion. This shift underscores Nigeria’s growing dependence on non-oil goods, despite gains in local refining.

The outlook aligns with President Bola Tinubu’s 2025 budget projections, which were built on expectations that inflation would drop from 34.6% to 15% and the naira would strengthen to around N1,500 per dollar. Whether these targets materialize will depend on global oil prices, domestic reforms, and how Nigeria manages political spending in the run-up to 2027.

Source: Nairametrics