Naira May Strengthen Below N1,000/$ in Next Year

MDU Capital Limited's latest research indicates that the naira could appreciate to below N1,000 per dollar within the next 12 months, with a fair value estimated at N984.7 per dollar. The research note titled “Nigerian Naira: Valuation Gap Points to a Potential Sub-N1,000/$1 Path Over the Next 12 Months” highlights a significant disparity between the naira's current market rate and its fundamental value.

The firm estimates the naira's fair value using three models: the money-supply model, which suggests a fair value of about N987 per dollar; the forward-rate model, estimating approximately N1,043 per dollar; and a blended model yielding N984.7 per dollar. MDU Capital anticipates further appreciation of the naira if the valuation gap narrows, projecting a potential rate of N933 per dollar by June 2027.

The analysis also outlines alternative scenarios for the currency's value, including a base case of N1,229 per dollar and a trend-continuation scenario of N1,027 per dollar.