When Standard Bank trimmed its 2025 outlook to a modest 3.1% slide, the Nigerian public‑debt market heard a very different tone from the street‑level analysts who see the naira tumbling toward N2,000 per dollar. The clash matters because the exchange rate ripples through everything from grocery shelves to overseas borrowing costs.
The latest round of projections landed on the trading floor in Abuja on , with the central bank’s official rate sitting at N1,535.61 per U.S. dollar. Analysts from five institutions laid out scenarios ranging from gentle appreciation to steep depreciation, each anchored to a different set of assumptions about oil prices, Eurobond issuance and the Central Bank of Nigeria’s policy stance.
Diverging Forecasts from Major Players
Coronation Merchant Bank Limited — through its research arm—pushed a base‑case where the naira weakens 11.7% to roughly N1,750 per dollar, a view they assign a 65% probability. Their more optimistic “optimistic” scenario even flips the script, projecting a 27.5% appreciation to N1,230.
Across the table, Comercio Partners offered a brighter picture. Ifeanyi Ubah, head of investment research, said a successful 2025 Eurobond could lift the naira to N1,400, citing the rally after the December 2024 issuance as a precedent.
On the pessimistic edge, Veriv Africa warned of a slide to N2,000 per dollar, coupled with 31% inflation and fuel prices breaching N1,100 per litre. The outlook draws on comments from Basil Abia, co‑founder, and Gospel Obele, chief economist at Streetnomics Ltd.
Meanwhile, the IMF’s July 2025 staff report noted that inflation had eased to 23.7% YoY in April, down from a 31% average in 2024, thanks largely to modest naira stabilization and better food‑grain output.
Underlying Economic Assumptions
All forecasters agree the Central Bank of Nigeria (CBN) has tightened policy this year, but they differ on how long the stance can be maintained. Coronation’s base case assumes “tight‑but‑gradual” monetary easing in the second half of 2025 as inflation cools, while Veriv Africa figures a policy slip could accelerate the currency’s fall.
Oil revenue remains the single biggest wildcard. If Brent closes above $85 a barrel, the CBN’s foreign‑exchange inflows could keep the naira within a N1,500‑N1,600 corridor. A sustained dip to $70 would erode that buffer, pushing the market toward Veriv’s worst‑case.
Capital‑market confidence also hinges on the hoped‑for Eurobond issue. According to Comercio Partners, a $2 billion 2025 Eurobond would not only fund the fiscal gap but also signal external investors that Nigeria’s debt service metrics are improving.
IMF Assessment and CBN Reforms
The IMF’s latest assessment highlighted two positive trends: higher foreign‑exchange inflows after the 2024 Eurobond and a “near‑convergence” of official and market rates, a result of the CBN’s crackdown on speculative trading. The fund warned, however, that downside risks remain “elevated,” especially if global financing costs rise or oil prices tumble.
Since early 2024, the CBN has rolled out a suite of reforms—tightened FX licensing, removal of multiple exchange‑rate windows, and stricter oversight of short‑term capital flows. These moves have narrowed the spread between the Central Bank’s quoted rate and the parallel market, a development some analysts credit for the recent comfort‑level gain.
Potential Impact on Inflation, Debt and Everyday Nigerians
Currency depreciation fuels imported‑inflation. Should the naira slide to N2,000, a basket of essential imports could cost up to 15% more, pushing household inflation into the mid‑30s. Conversely, a modest appreciation to N1,400 could shave a few percent off food and fuel bills, easing pressure on the central bank’s inflation target.
On the sovereign‑debt front, a weaker naira raises the local‑currency value of external debt, inflating debt‑service costs. That could force the government to seek additional Eurobond financing or tap the IMF’s standby facility, each with its own policy strings.
For investors, the spread between the naira’s spot rate and the CBN’s “cross‑rate” will dictate arbitrage opportunities. A stable or appreciating naira could revive foreign portfolio inflows, while a sharp decline may trigger capital flight.
Looking Ahead: Scenarios for 2025 and Beyond
Comercio’s three‑scenario framework paints a clear picture:
- Best‑case: Eurobond succeeds, oil stays strong, naira climbs to N1,400 by year‑end.
- Base‑case: Steady FX inflows, oil at $80, naira hovers between N1,500‑N1,600.
- Worst‑case: Oil weakens, portfolio outflows, naira slips beyond N1,700, possibly touching N2,000.
Standard Bank, after revising its outlook, now expects the naira to close 2025 at N1,585.5, modestly weaker than its 2024 estimate of N1,697.5. The bank also projects a longer‑run level of N1,692.6 by end‑2026, suggesting that any 2025 shock may be transitory if policy stays disciplined.
In the meantime, market participants will watch three key indicators: Brent crude prices, the CBN’s policy rate, and the timing of the 2025 Eurobond. Any deviation could quickly shift the probabilities that each institution assigns to its own scenario.
Frequently Asked Questions
How will a weaker naira affect everyday consumers?
A depreciation to around N2,000 per dollar would raise the cost of imported goods—fuel, food and electronics—by roughly 10‑15%. That pressure would feed into overall inflation, squeezing household budgets and potentially prompting the CBN to tighten monetary policy further.
What role does the 2025 Eurobond play in the forecasts?
If the government successfully issues a $2 billion Eurobond, it would provide fresh foreign exchange, improve Nigeria’s debt‑service profile, and boost investor confidence. Comercio Partners links the bond to a potential naira appreciation to N1,400, while failure to secure it could underpin the pessimistic scenarios.
Why do analysts have such divergent views on the naira?
The split stems from differing assumptions about oil prices, policy endurance, and external financing. Institutions like Veriv Africa stress vulnerable oil revenue and high inflation, while Standard Bank and Comercio Partners place more weight on recent CBN reforms and potential Eurobond success.
What does the IMF say about Nigeria's economic outlook?
The IMF’s July 2025 report notes that inflation has eased to 23.7% year‑on‑year, thanks to a more stable naira and better food‑production. However, it cautions that global uncertainty—especially oil‑price volatility—remains a downside risk that could reverse recent gains.
What should investors watch for in the coming months?
Key signals include Brent crude price trends, any adjustment to the CBN’s policy rate, and the official launch date of the 2025 Eurobond. Shifts in any of these will likely tilt the probability mix among the competing forecasts.
Grace Melville
October 7, 2025 AT 21:32Key takeaway: the naira's path largely hinges on oil prices and the success of the 2025 Eurobond. 👍