Naira Forecasted to Stabilize Between N1,250 and N1,350

The Nigerian currency, the Naira, is expected to trade stable to bullish, with a six-month target range of N1,250/$ to N1,350/$, bolstered by interventions from the Central Bank of Nigeria (CBN) and market confidence. The effective lower bound is set at N1,250/$, where market players anticipate CBN intervention.

The upper limit is N1,350/$, influenced by dollar supply from export proceeds and foreign portfolio inflows. The CBN reported gross external reserves of $55 billion and net foreign exchange reserves of $46 billion.

The Monetary Policy Committee (MPC) has cut the Monetary Policy Rate (MPR) by 350 basis points from 26.5% to 23.0%, which may exert pressure on the Naira due to a narrower interest rate differential. A strong reserve position is crucial for reassuring investors about FX availability, while seasonal surges in import demand could lead to heavy dollar-buying orders, potentially breaching the N1,350/$ resistance level.