Nigeria Economic Outlook: NESG Forecasts ₦1,480 Exchange Rate Amidst Reserve Growth
Nigeria’s foreign reserves are expected to see a significant boost
The Nigerian Economic Summit Group (NESG) has projected that the Naira will trade at an average of ₦1,480 to the US Dollar in 2025, supported by an anticipated increase in foreign reserves to $52 billion. In its latest Macroeconomic Outlook report, the think tank highlights that improved foreign exchange inflows and stringent monetary policy will be the primary drivers of currency stability and economic resilience in the coming year.
Foreign Reserve Growth and Currency Dynamics
According to the NESG, Nigeria’s foreign reserves are expected to see a significant boost, reaching $52 billion by the end of 2025. This accretion is attributed to increased crude oil production, improved non-oil exports, and a rise in Foreign Direct Investment (FDI). The report suggests that this robust reserve cushion will provide the Central Bank of Nigeria (CBN) with the necessary tools to manage exchange rate volatility more effectively.
The projected exchange rate of ₦1,480/$ represents a shift toward market equilibrium. The NESG notes that while the currency has faced intense pressure following the unification of exchange rate windows, the convergence of rates and the elimination of arbitrage opportunities are expected to foster a more transparent and sustainable foreign exchange market.
Drivers of Economic Stability
The NESG identifies several key factors that will underpin these macroeconomic improvements. Central to this forecast is the expectation of increased domestic refining capacity, particularly from the Dangote Refinery, which is poised to reduce the demand for foreign exchange for petroleum imports. Furthermore, the report anticipates that the tightening of monetary policy by the CBN will continue to attract portfolio investors seeking higher yields, thereby supporting the capital account.
The group also projects a moderate uptick in the Gross Domestic Product (GDP) growth rate, driven by the services sector and a recovery in oil output. However, the report cautions that achieving these targets depends heavily on the government’s ability to address internal security challenges and infrastructure deficits that currently hamper productivity.
Inflationary Pressures and Fiscal Policy
Despite the optimistic outlook on reserves and the exchange rate, the NESG highlights that inflation remains a critical concern. While the group expects a gradual deceleration in headline inflation due to base effects and improved food supply, prices are likely to remain above the single-digit target in the near term. The report emphasizes the need for synchronized fiscal and monetary policies to ensure that currency stability translates into tangible relief for Nigerian households and businesses.
Data from the report indicates that fiscal discipline will be paramount. The NESG urges the Federal Government to optimize tax collection and reduce the cost of governance to prevent excessive deficit financing, which could otherwise undermine the projected gains in the foreign exchange market.
Forward-Looking Perspective
The NESG’s 2025 outlook presents a cautiously optimistic roadmap for Nigeria’s recovery. With the Naira projected to settle at ₦1,480 and reserves climbing to $52 billion, the Nigerian economy stands at a pivotal juncture. Success will ultimately depend on the consistent implementation of structural reforms and the maintenance of a transparent regulatory environment to sustain investor confidence. For policymakers and investors, these projections serve as a benchmark for navigating the evolving Nigerian economic landscape over the next 12 to 18 months.
