The Nigerian Naira is poised for a remarkable comeback! Cordros Securities predicts that by 2026, the Naira could reach a value of N1,350 against the US Dollar, a significant recovery from its previous struggles.
But what's driving this optimistic forecast? Cordros' 2026 outlook report, titled "Building Momentum Beyond the Rebound," reveals a range of positive developments. The report suggests that the Naira will trade between N1,450 and N1,350 as the foreign exchange market distortions gradually dissipate.
Here's the intriguing part: a favorable foreign exchange environment, increased external inflows, and consistent policy discipline are expected to boost investor confidence in the Naira throughout 2026. This could bring the exchange rate closer to its equilibrium of N1,230.
However, there are potential risks. The analysts caution that election-related money supply increases, sustained oil price drops below USD 58 per barrel, and returning global pressures could lead to adverse trade dynamics, pushing the Naira to NGN 1,550 by year-end. But here's where it gets controversial: is this a realistic concern, or are these factors already priced in?
The Naira's recent appreciation in 2025 has been a telling sign of its undervaluation. The IMF's Real Effective Exchange Rate (REER) index suggests it's undervalued by approximately 23.6%, with a fair value around N1,163/USD. Cordros' new approach, the Behavioural Equilibrium Exchange Rate (BEER) model, further supports this, indicating a 19.3% undervaluation at N1,521.60/USD compared to its fair value of N1,230.
As of now, the Naira has appreciated over 5% year-to-date against the USD in 2025, a positive trend not seen since 2019. It opened the year at N1,537 per USD and has experienced both gains and setbacks, with a recent slight depreciation in mid-December. And this is the part most people miss: how will these fluctuations impact the average Nigerian's daily life and the country's economic prospects?
The market trend section provides a detailed account of the Naira's journey throughout 2025, showcasing its resilience and potential for growth. Will the Naira continue its upward trajectory, or are there unseen challenges ahead? Share your thoughts and predictions in the comments below!
