The naira could appreciate beyond N1,300 per dollar as stronger foreign exchange supply, Central Bank of Nigeria (CBN) interventions and improved market confidence support the local currency, according to market projections.
A report by Nairametrics published on Saturday projected a stable-to-bullish outlook for the naira over the next six months, with the exchange rate expected to trade within a range of N1,250 to N1,350 per dollar.
The projection suggests that sustained dollar inflows could strengthen the naira beyond the N1,300/$ threshold, although the outlook remains dependent on foreign exchange supply, demand conditions and the CBN’s policy response.
The anticipated improvement in supply could be supported by export proceeds, foreign portfolio investments and central bank interventions in the Nigerian Foreign Exchange Market (NFEM).
Such inflows would help improve dollar availability, ease pressure on the exchange rate and support greater stability in the foreign exchange market.
N1,250/$ emerges as potential support level
The report identified the N1,250-N1,300/$ range as a potential support zone for the naira, where market participants could adjust their positions in anticipation of further central bank intervention or changes in investment flows.
At the other end of the projected corridor, the N1,350-N1,400/$ range represents a potential resistance zone, where stronger dollar supply could help prevent further depreciation if the exchange rate moves towards that level.
The outlook indicates that the direction of the currency will depend substantially on the balance between available foreign exchange and demand from importers, investors and other market participants.
Regular CBN dollar sales could also influence trading patterns by increasing the supply of foreign currency in the official market.
Risks remain to naira appreciation
Despite the positive outlook, the report identified several factors that could weaken the naira or limit further appreciation.
These include a decline in international crude oil prices, a sudden increase in import-related dollar demand and a renewed acceleration in domestic inflation.
Lower oil prices could reduce foreign exchange earnings, while stronger import demand could increase pressure on available dollar supply.
A resurgence in inflation could also complicate monetary policy decisions and undermine confidence in the currency.
The naira’s performance will therefore depend not only on CBN interventions but also on the sustainability of external inflows and broader macroeconomic conditions.
Market confidence remains critical
The projected exchange-rate corridor highlights the importance of maintaining consistent foreign exchange supply and investor confidence in Nigeria’s financial markets.
Sustained export earnings and portfolio inflows could provide additional support for the naira, while weaker inflows or a sharp increase in dollar demand could push the currency towards the weaker end of the forecast range.
For businesses and investors, the outlook suggests the possibility of a stronger naira in the coming months, but the N1,300/$ threshold remains a forecast rather than a guaranteed outcome.
The six-month projection will ultimately be tested by actual dollar inflows, external market conditions and the CBN’s management of foreign exchange liquidity.
