Economist Yemi Kale has warned that the Nigerian naira is likely to remain under pressure against the US dollar throughout 2026, with potential outcomes ranging from moderate depreciation to a more severe decline. Kale shared these insights as the keynote speaker at the FirstBank Nigeria Economic Outlook 2026, highlighting the challenges facing Nigeria’s currency amid global economic pressures and domestic fiscal constraints.
The report outlines three potential scenarios for the USD/NGN exchange rate, influenced by factors such as oil prices, foreign-exchange inflows, inflation trends, and policy consistency. Under the baseline scenario, the naira is expected to trade between ₦1,350 and ₦1,450 per dollar by the end of 2026. This forecast assumes moderate improvements in Nigeria’s FX reserves, relative stability in Central Bank policies, and a gradual decline in inflation, without major global shocks.
In a more optimistic scenario, the naira could strengthen to ₦1,200–₦1,300 per dollar, supported by strong oil price recovery, successful export diversification, effective FX reforms, and improved liquidity. Rising FX inflows from oil, gas, remittances, and non-oil exports, alongside a weaker global dollar, could further boost investor confidence. However, even at this level, the naira would remain weaker than historical benchmarks, reflecting underlying structural challenges in the economy.
Conversely, the pessimistic scenario projects the naira weakening to ₦1,550–₦1,650 or more. This could result from weak oil prices, FX liquidity crises, rising inflation, and broader fiscal pressures. While extreme, this outcome highlights persistent vulnerabilities such as import dependence, FX mismatches, and structural inflationary risks that could exacerbate currency pressure.
Kale’s outlook also emphasized broader economic factors shaping Nigeria’s future, including a gradual rebuild of external reserves toward $45 billion by 2027, growing non-oil exports, and infrastructure-driven investments. Despite progress in refining, energy, and export growth under the AfCFTA, structural challenges like infrastructure gaps, energy constraints, and governance risks remain. Strategic policy consistency and targeted investments will be critical to stabilizing the naira and strengthening Nigeria’s economic resilience.
source: nairametrics