Here’re five projections of naira, inflation in 2025

The year 2025 promises to be one of moderation for the naira and inflation as analysts predict that the Nigerian economy will witness recovery, unlike the rampant pains occasioned by rising prices and weak currency in 2024.

The naira, which closed 2024 losing about 41 percent of its value and for most of the year was accorded as one of the worst performing currencies by World Bank and Bloomberg, has begun to strengthen.

The local currency appreciated by N125 to a dollar one month after the launch of the Electronic Foreign Exchange Matching System (EFEMS), according to a BusinessDay’s report, with analysts saying the gains might be an indication that the naira’s rebound journey might just have begun.

Prices in Africa’s most populous nation climbed to a three decade high of 34.6 percent in November 2024 and the central bank has raised the benchmark interest rates to 27.5 percent in an effort to tame inflation.

Here are key projections for the naira and inflation in 2025:

• Afrinvest Research

Analysts at Afrinvest Research see the naira depreciate to a weighted fair value of N1,804.45 this year as the tendency for volatility persists. Inflation is predicted to slow to 24.7 percent at a base case scenario.

“Our prognosis is hinged on the belief that the CBN would be constrained from adequately meeting market demand on a sustained basis, as the recent FX reserves accretion were largely driven by inflows from inorganic sources, including those with stringent conditions on usability,” the analysts said.

• Cardinalstone Research

Cardinalstone research analysts, in their forecast, noted that Nigerians are likely to contend with inflation printing at 30.0 percent again in 2025 after the 33.0 percent average of 2024, as most inflationary drivers are likely to be stable rather than improve.

“However, on the more comforting front, year-end inflation is likely to print at 26.2% vs 35.1% projected this year. Notably, currency movement, which has contributed about 20.0% – 30.0% to inflation in the last few years, is likely to be relatively stable in 2025,” the analysts said.

Read also: Naira defies stronger dollar as emerging-market currencies slide

It places the naira’s fair value at approximately N1,720.88/$ for 2025 on the back of the introduction of the EFEMS platform, increasing foreign portfolio inflows, greater access to dollar-denominated debt, rising FX reserves, and a positive current account balance.

• Veriv Africa

Analysts at Veriv Africa said inflation will remain stubbornly high in 2025, although it is expected to ease moderately compared to 2024. It however projects that the naira will settle at N1,790 per dollar at the parallel market.

“The inflation rate is projected to average 31.81% in a bull case scenario, 34.52% in a base case scenario, and 37.16% in a bear case scenario. This will be a 1.75% improvement (base case) from an estimated average of 32.77% in 2024.”

The sustained inflationary pressure is to be driven by recurring challenges such as currency depreciation, food inflation due to insecurity and climate change impact, including flooding, high energy costs, and elevated logistics costs.

• Bismarck Rewane

Bismarck Rewane, a renowned economist and CEO of Financial Derivatives Company, said inflation has been eroding household incomes and business gains but may drop by the second half of the year.

“The moderation in inflation is not going to be as low as we expected. We’re going to be seeing 25 or 27 percent by the end of the year with some luck.”

Rewane explained that since prices are still high, the monetary policymakers may not begin lowering borrowing costs immediately, stating that with inflation cooling later in the year interest rates may begin to slow.

• Biodun Adedipe

In his outlook, Biodun Adedipe, founder and chief consultant at B.Adedipe Associates Limited, however, expects inflation to drop to 33 percent by the end of 2024 while the naira averages 2025 at N1,574.4/$1.

“The naira will lose value but very moderately. We estimate the exchange rate at N1,574.4/$1. MPR will be moderated as inflation is expected to end 2024 at 33 percent and 27 percent in 2025,” the economist said.


Related Content

Network18 Media reports ₹1,400 crore loss amid Viacom18 merger in Q3

From Stamps to Slots: How Collecting Inspired Gambling

Why Players in the UK Are Going App-Exclusive

Leave a Comment