Reasons Naira Will Remain Stable In 2025
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), has projected that the naira will maintain its stability against the dollar throughout 2025, following a period of relative calm in the official foreign exchange (FX) market from July to December 2024.
In his economic review for 2024 and outlook for 2025, Yusuf attributed the naira’s improved performance to regulatory reforms and interventions by the Central Bank of Nigeria (CBN). “After a turbulent 18 months, the naira experienced significant stabilization in the latter part of 2024,” Yusuf said. By the end of 2024, the official exchange rate at the Nigerian Foreign Exchange Market (NFEM) stood at N1,537, up from N1,455.59 in January and N907.1 in December 2023.
Yusuf pointed to several key factors that are expected to contribute to the naira’s continued stability in 2025. One major factor is Nigeria’s foreign reserves, which have surpassed $40 billion, with expectations of further growth driven by increased remittances from Nigerians in the diaspora and inflows from International Money Transfer Operators (IMTOs).
Additionally, Yusuf highlighted critical financial measures such as the $2 billion Eurobond, $500 million domestic dollar bond, and the clearance of $7 billion in legacy forex obligations by the CBN, all of which are expected to strengthen the central bank’s ability to manage the forex market.
A significant factor supporting the naira’s outlook is the impact of the newly operational Dangote and Port Harcourt refineries. “These refineries will reduce Nigeria’s reliance on foreign currency for fuel imports, easing pressure on the naira,” Yusuf noted. He also pointed to a gradual recovery in the non-oil export sector, which should contribute positively to foreign exchange inflows.
Although inflation reached a record 34.2 percent in November 2024, Yusuf expects it to moderate slightly in 2025. He attributed this potential easing to reduced exchange rate volatility, geopolitical shifts, particularly the return of Donald Trump to the U.S. presidency, and a potential stabilization of global oil markets.
“The naira’s recovery and a possible reduction in energy costs could help ease inflationary pressures,” Yusuf added. He also noted that the high inflation base of 2024 could make the figures for 2025 appear more manageable.
However, Yusuf cautioned that challenges such as high energy costs, transportation expenses, and insecurity affecting agricultural output may still contribute to inflation in 2025. He also pointed out that climate change, flooding, and global supply chain disruptions would remain significant risks.
Reflecting on the economic challenges of 2024, Yusuf said inflation worsened poverty and increased operational costs for businesses, shrinking profit margins. “Weak consumer purchasing power meant businesses couldn’t pass on additional costs to consumers, leading to higher loan defaults and stalled projects across various sectors,” he explained.
Despite these ongoing challenges, Yusuf emphasized that the groundwork laid in 2024—through regulatory reforms and strategic interventions—will provide a solid foundation for Nigeria’s economic resilience in 2025. “Maintaining and building on these efforts will be key to sustaining stability and gro
wth,” he concluded.
