Naira Expected to Remain Broadly Stable in Near Term, Analysts Say

Analysts at Cowry Asset Management Ltd have said they expect the naira to remain largely stable in the short term, citing sustained improvement in external reserves and ongoing policy measures aimed at enhancing foreign exchange market liquidity. In a report released over the weekend, the analysts noted that demand pressures and global market developments may continue to drive intermittent volatility.

Mixed Performance Against the Dollar Last Week

The analysts stated that the naira delivered a mixed performance against the US dollar across the foreign exchange market last week. At the official window, the local currency depreciated marginally by 0.04 per cent week-on-week to close at N1,380.18/$1. In the parallel market, the naira remained unchanged, closing at N1,379.07/$1.

External Reserves Rise to $51.89 Billion

Nigeria’s external reserves rose by 0.23 per cent week-on-week to $51.89 billion, indicating a modest improvement in the country’s external liquidity position. The report highlighted that this improvement, combined with policy measures, supports the outlook for naira stability in the near term.

Crude Oil Prices Gain on Geopolitical Tensions

In the commodities market, crude oil prices were on track to record their strongest weekly gain since April, driven by renewed geopolitical tensions in the Middle East. The re-escalation of the conflict, coupled with disruptions to shipping flows through the Strait of Hormuz, pushed oil prices to their highest levels in more than a month. As of Friday’s Asian trading session, both major crude benchmarks extended their gains following a sixth consecutive night of US military strikes on Iran.

Outlook for the Naira and Oil Market

The analysts expect the naira to remain broadly stable in the near term, supported by the sustained improvement in external reserves and ongoing policy measures. However, they warned that demand pressures and global market developments may continue to drive intermittent volatility. In the commodities market, crude oil prices are likely to remain elevated as geopolitical tensions in the Middle East continue to influence supply expectations. Market participants will closely monitor developments in the region, OPEC+ policy signals, and global demand conditions for further direction.

Separately, New Telegraph reports that analysts at Quest Merchant Bank said in a note last week that they expect Nigeria’s external reserves to continue heading north in the near future, driven by factors such as improved export earnings, especially higher crude oil output, and sustained Foreign Portfolio Investment (FPI) inflows.

For Nigerian businesses and consumers, the relative stability of the naira in the near term offers some predictability for import costs and pricing. However, the intermittent volatility flagged by analysts means that businesses should remain cautious and hedge against potential swings, especially if global oil prices shift or demand pressures intensify.