Citigroup Inc. has projected that Nigeria’s naira could face modest pressure in 2026 after stabilizing through 2025 following the Central Bank of Nigeria’s (CBN) first interest rate cut in five years and expectations of weaker oil prices.
In a note to clients, David Cowan, Citi’s African economist (ex-South Africa) said the local currency of Africa’s top oil producer may weaken to between ₦1,650 and ₦1,700 per dollar by mid-2026, compared to about ₦1,490/$ currently.
Policy Shift
The CBN reduced its key policy rate by 50 basis points to 27% on Tuesday, the first cut in five after inflation slowed to 20.1% in August..
“If, as we expect, inflation starts to ease next year and the CBN starts to more aggressively ease its tight monetary policy stance, we would expect some modest pressure on the naira as 2026 progresses,” Cowan said.
Oil and Portfolio Flows
Citi noted that potential weakness in oil prices next year could weigh on Nigeria’s FX earnings and amplify the pressure on the naira.
In addition, outflows from portfolio investors could also accelerate depreciation with current inflows estimated at $9 billion.
Current Performance
So far in 2025, the naira has appreciated by 3.6%, supported by stronger oil exports, CBN’s dollar interventions, and portfolio inflows into the bond market.
This contrasts sharply with 2024, when the naira depreciated by 43.5% following currency reforms introduced by President Bola Tinubu.
The currency traded relatively unchanged at ₦1,490.4 per dollar at the close of trading in Lagos on Wednesday.