Naira's Rollercoaster Ride: CSL's 2025 Outlook Offers Cautiously Optimistic View

In a bid to find some predictability in the ever-fluctuating Naira, a new report from CSL Stockbrokers offers a cautiously optimistic view for the second half of 2025. The report notes that the Naira, which started the year around 1,535/US$, saw a marginal appreciation in the first half, closing at about 1,530/US$. This stability is largely attributed to the Central Bank of Nigeria's (CBN) injection of US$4.1 billion into the FX market, a significant increase from last year's US$1.3 billion. However, the report also highlights the need for material improvement in FX inflows to sustain the CBN's defense strategy for the Naira.

Key Takeaways:

• The Naira appreciated marginally in the first half of 2025, closing at 1,530/US$, a gain of 0.4% year-to-date.
• The Central Bank of Nigeria injected US$4.1 billion into the FX market in H1 2025, a significant increase from last year's US$1.3 billion.
• CSL expects the CBN to keep the exchange rate trading comfortably between the 1,500-1,600/US$ band for the rest of the year.
• The report highlights the need for material improvement in FX inflows to sustain the CBN's defense strategy for the Naira.
• Inflation is expected to average around 22.9% in 2025, a downward adjustment from earlier forecasts.
• The report notes a potential shift toward a more accommodative monetary policy stance later in the year, possibly by 100-150 basis points.

Statistics:

• 1,535/US$: The starting rate of the Naira in the first half of 2025.
• 1,530/US$: The Naira's closing rate in the first half of 2025.
• 0.4%: The Naira's year-to-date appreciation.
• US$4.1 billion: The CBN's injection into the FX market in H1 2025.
• US$1.3 billion: The CBN's injection into the FX market in 2024.
• 22.9%: The expected average inflation rate in 2025.
• 100-150 basis points: The potential interest rate cut.

Sources:

• CSL Stockbrokers, '2025 Outlook'
• Central Bank of Nigeria