ECONOMISTS have told Nigerians and policy makers not to be carried away by the current exchange rate, stressing that the present naira appreciation is not sustainable and should not be celebrated.

The naira has remained stable since late 2024 at around N1500/$ to N1600/$. The official- and parallel-market exchange rates converged for the first time in nearly two years at N1,510/$ last week, BusinessDay reported. The naira has shown some level of stability in the last two or three months at least, allowing investors and analysts to make projections and plan.

Given the currency’s stabilty, economists and financial experts projected that the naira would recover in 2025, with some predicting the exchange rate at N1300/$ to N1400/$ by the end of the year.

However, some economists are beginning to see the naira trajectory in a different perspective. An economist, Dr Graham-Chuks Amebo, who is also a United Kingdom-based development consultant, said the naira will “find its level in a matter of months.”

“We still need to raise our exports. And there is often a time lag between policies and results. So, what we see now is temporary. The reserves are falling, which is no good news, and the demand for the dollar is still high. Inflation is still high, even with rebasing. The naira will have to be tested this year before it can find its real value,” he said.

Managing Director and Chief Executive Officer of Lagos-based Financial Derivatives Company, Mr Bismark Rewane, said on Channels Television recently that the naira appreciation is temporary and Nigerians should not be carried away by it.

“We are seeing that the naira is strengthening but with caution. Let’s not be too hasty because it’s going to correct itself. There are many things that are happening now. Reserves of over $40 billion are coming down. We have also borrowed $4 billion in bond issues. When you look at all of that, we have almost spent $8 billion to support the naira at the current levels,” Mr Rewane said.

Earlier, Chief Executive Officer of Lagos-based Economics Associates, Dr Ayo Teriba, had maintained a similar position, revealing that the current naira rally is nothing to celebrate.

“The exchange rate has weakened to as far as N1,900/$ and it improved to a best record at the end of April last year when it was at N1,300/$. Now it’s gone to N1,650/$ and now going back to N1,500/$. But compared to N1,300/$ in April last year, there’s nothing to celebrate,” Teriba told BusinessDay TV.

“Don’t be too quick to express optimism or commend efforts. Inflation is still at record levels. Let’s hope that the exchange rate weakens at a sustainable level to bring inflation down,” Teriba further said.

Earlier predictions

Earlier, a United Kingdom-based currency expert, Dr Henry Uwabobua, had said that the naira would weaken moderately to N1780/$ by the end of 2025, hinging his projection on possible higher foreign exchange inflows in 2025 and reduced pressure on the local currency.

“There will be less pressure on the foreign exchange market in 2025 due to the refineries that are up and running. Hence with Dangote, Warri and Kaduna refineries that are now on, the desire to source dollars to import petrol and other similar fuels will be low or non-existent,” said Dr Uwabobua, who is also an economist and visiting professor at a United States’ university, said.

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“Secondly, the government sold the dollar bond last year and we might begin to see some measure of its benefits this year. Also, the Central Bank of Nigeria (CBN) measures are beginning to work. The newly-introduced Electronic Foreign Exchange Matching System (EFEMS) is also helping the naira.”

EFEMS helps to enhance governance, transparency and facilitate a market-driven that will be accessible to the public, according to the Central Bank of Nigeria (CBN).

Cardinalstone Research had also projected that the naira would hover around N1,720.88/$ in 2025 due to several factors such as the CBN introduction of the EFEMS platform, rising foreign reserves, increasing foreign portfolio inflows, greater access to dollar-denominated debt and a positive current account balance.

Afrinvest Research, on the other hand, had noted that the naira could depreciate to N1,804.45 in 2025 owing to issues around volatility, noting that the CBN would struggle to meet dollar demands this year.

“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 firm said.

A finance expert, Mr Adekunle Wahab, had noted that the naira would likely remain around N1,780/$ or N1,800/$, stressing that his projection was based on the time effect of policy change.

“There is always a lag between when a policy is made and when its impact is felt by the people. This is why I believe that we may not be able to feel the impact of some of the positive steps taken by the government last year. So, I assume that we will begin to see such impacts in 2026 and 2027,” he said.

However, a development economist, Mr John Bashua, had projected that the exchange’s worst period was over, projecting that it would settle around N1000/$ to N1300/$ this year.

“We will likely see the naira hover around 1,000/$ to !,300/$ this year. The pressure from petrol imports will be less considering that we now have functional refineries. That, alone, will take a lot of burden off the naira or the exchange rate market,” he said, sounding optimistic.

But an economist, Ms May Brathwaite, was not so optimistic. She said the naira would strengthen in 2025 but not anything below 1500/$.

“I foresee the naira around 1,500/$ this year due to the refineries and the EFEMS. I do not see the naira returning to 1,000/$ threshold but at least it should be around 1,500/$ or 1,450/$,” she said.