Naira Expected to Stabilize Between N1,290 and N1,370 in October

The USD/NGN exchange rate is expected to hold between N1,290 and N1,370 per US dollar for October. The Monetary Policy Committee has eased its policy stance, reducing the policy rate to 23%.

This, along with seasonal fourth-quarter import demand, is likely to prevent significant appreciation of the naira. Disinflationary trends and easing inflation, nearing 14%, along with increased domestic petroleum processing, support real-yield sentiment and slow the naira's depreciation.

However, low interest rates in Nigeria limit the spread for investors, affecting capital inflows. Increased foreign exchange demand is anticipated ahead of the Yuletide season, which will likely keep the naira around the N1,300/$ level.

The Central Bank of Nigeria's foreign reserves exceed US$55 billion, providing a buffer for potential market interventions. Operational reforms have improved price discovery and liquidity in the official market, supported by high crude oil production and elevated international oil prices.