The year 2025 promises to be one of moderation for the naira and inflation as analysts have predicted that the Nigerian economy will witness a steady ride unlike the rampant pains occasioned by rising prices, weak currency in the outgone year.
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 and in an effort to control fast rising prices, the central bank raises key interest rates to 27.5 percent.
Read also: Naira stability, lower inflation to shape economy in 2025
Here are the projections:
Afrinvest Research
Analysts at Afrinvest Research see the Nigerian naira depreciate to a weighted fair value of N1,804.45 this year as tendency of volatility persists while 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 outlook forecast 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.
Read also: Inflation, MPR to decline as naira seen stabilising in 2025
“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.
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 US 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 as flooding, high energy costs, and elevated logistics costs.
Bismarck Rewane
Bismarck Rewane, a renowned economist and CEO of Financial Derivatives Company said inflation which has been punishing household incomes and eroding business gains may drop by the second half of the year but predicted that prices will quicken to 35.4 percent in December.
“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, 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 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 to be moderated as inflation is expected to end 2024 at 33 percent and 27 percent in 2025,” the leading economist said.
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