Naira steadies at N1,370-1,385/$ as reserves hit $51B, but year-end dollar demand may test N1,400/$

Nigeria's naira is holding steady between N1,370 and N1,385 against the dollar as foreign reserves climbed to $51 billion, driven by oil exports, debt inflows, and portfolio investments. The CBN's 26.5% policy rate and Treasury Bill yields above 16% are luring carry trades, while stricter bureau de change rules have cleared a backlog of foreign payments.

The strengthening US dollar, fueled by Middle East conflict inflating inflation fears and bets on further Federal Reserve rate hikes (50.9% chance of 2+ hikes by December per CME FedWatch), adds external pressure on the naira despite domestic support.

However, corporations stocking up for end-of-year shopping could push demand for dollars, potentially weakening the naira past N1,400/$. The base case sees it trading between N1,320-1,420/$ until mid-year, with potential to strengthen to N1,200-1,250/$ by December if reserves hit the CBN's $55B target and non-oil exports grow.

For Nigerians managing forex needs, this means monitoring two key triggers: whether the CBN reaches its $55B reserve target (watch CBN monthly reports) and non-oil export growth data. Year-end corporate dollar demand may create temporary weakness around N1,400/, suggesting timing forex purchases could save money. Will you hedge against year-end dollar strength now, or wait to buy dollars closer to your payment dates if the naira weakens as expected?

SOURCE: https://nairametrics.com/2026/07/13/naira-outlook-improves-despite-a-rampaging-us-dollar/