Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The naira may slide to N1,700 per US dollar by the end of 2025, according to a new H2 economic outlook by Cordros Securities.

This would represent a 9.5% drop from current rates and highlights Nigeria's ongoing currency vulnerability, despite efforts by the Central Bank of Nigeria (CBN) to stabilise the market.

The Cordros report, however, acknowledges that recent FX reforms and stronger reserve buffers have mitigated more severe devaluation.

In their words: “The naira could have weakened beyond N1,700/$1 without these measures.”

Notably, the policy allowing Bureau De Change (BDC) operators to purchase FX from authorised dealers has narrowed the official-parallel market gap to a YTD average of 2.6%.

Nigeria’s external reserve position has also improved, reaching $23.11 billion by December 2024, up from $3.99 billion a year earlier.

This financial buffer gives the CBN the latitude to continue intervening in the FX market to defend the naira from excessive swings, albeit temporarily.

External risks still pose threats

Despite these gains, global factors remain key pressure points. Geopolitical tensions, unstable oil prices, and high interest rates in developed economies threaten to erode investor sentiment and hurt dollar inflows.

Analysts caution that any escalation could push the naira beyond N1,850/$1 under a worst-case scenario.

Locally, the naira is benefiting from increased investor confidence, partly due to high interest rates and stabilising inflation.

Cordros reports that speculative demand for the dollar has eased, as more Nigerians are holding onto their naira assets.

One of the strongest supports to Nigeria’s FX market is remittance flows, which totalled over $21 billion in 2023 alone.

Recognising this, the CBN under Governor Olayemi Cardoso introduced the Non-Resident Bank Verification Number (NRBVN), allowing Nigerians abroad to remotely open BVN-linked accounts.

This reform is already showing results, pushing remittances above $600 million monthly in early 2025.

However, a new U.S. policy may derail progress. President Donald Trump recently signed a bill imposing a 3.5% tax on outbound remittances.

For many Nigerian families relying on monthly transfers of $100 to $500, the added cost could discourage formal remittance channels, pushing senders underground and slashing Nigeria’s FX inflows.

Simultaneously, countries like the UK and UAE are tightening immigration and visa requirements for Nigerians, making it harder for the diaspora to earn and remit funds legally.

From one-entry visa limits to $10,000 minimum balance conditions, these rules could choke remittance flows further.

Despite the headwinds, Governor Cardoso remains optimistic, setting a $1 billion per month remittance target.

Daily Sun reports that the CBN is exploring diaspora bonds and targeted investment funds in housing, agriculture, and clean energy as new strategies to attract long-term diaspora capital.

Analysts like Johnson Chukwu of Cowry Asset Management and Dr Temitope Fasoranti of Zenith Bank stress the need for investment-led diaspora engagement.

They advocate high-transparency instruments that allow Nigerians abroad to fund critical sectors back home in exchange for security and returns.

With a volatile external environment, fragile domestic economy, and fluctuating oil revenue, Nigeria faces steep challenges in stabilising its currency.

While the CBN has made bold reforms, only a combination of resilient diplomacy, diaspora trust, and structural diversification can prevent a deeper FX crisis. The road to N1,700/$1 is not guaranteed—but it is worryingly plausible.

Legit.ng earlier reported that a sharp fall in dollar liquidity last week reversed the naira’s short-lived recovery in Nigeria’s official FX market.

The naira depreciated by N1.70 against the US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) last week, closing at N1,530.26 per dollar, after gaining steadily in previous sessions.

This depreciation comes at a time when the dollar supply in the official window plunged 57.4%, highlighting a resurgence of pressure in the currency market.

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Source: Legit.ng