With analysts predicting decreased imports of food and fuel and stronger foreign exchange inflows into the economy, the naira is set for a surprising recovery in 2025.
They predict that the upcoming year will see increased oil output, larger net capital inflows into the economy, and a decrease in the import of food and gasoline. They pointed out that the local currency is supported by all the facts.
According to Uche Uwaleke, head of Nasarawa State University’s Institute of Capital Market Studies, the forecast is a result of increasing fuel exports, which would provide foreign exchange earnings for the nation, and decreased imports of food and gasoline.
He cited the decline in petroleum product imports as a major driver of the naira’s recovery.
He also emphasized the potential effects of higher revenue from petroleum product exports.
The naira would be supported by diaspora remittances and foreign portfolio investments, according to Uwaleke.
Strong external reserves, he claimed, would strengthen the economy and maintain the value of the naira.
On Friday, December 19, 2024, the naira strengthened against the US dollar, closing at N1,541 to the dollar, up from N1,545 the day before. Additionally, on the last day, the naira traded at N1,600 per dollar, down from N1,680 on the parallel market.
Analysts claim that the value of the Nigerian Naira has dropped by 70% in relation to the US dollar.
After the Ethiopian lira and the Lebanese pound, the local currency was named the worst-performing currency in the world in October 2024.
According to the experts, increased oil output will have a beneficial impact on external reserves and, consequently, the value of the naira.
Nigeria’s crude oil production increased to 1.69 million barrels per day in November, the highest level since April 2021.
Additionally, since FX trading has become more transparent, the naira has appreciated in value due to the recently implemented Electronic Foreign Exchange Matching System (EFEMS).