Experts Explain Why Naira Will Trade at N1,400, N1,500 in 2026 as Nigeria’s Reserves Rise
Naira expected to stabilise between N1,400 to N1,500 per dollar by 2026, driven by oil reforms
Fiscal discipline remains Nigeria's urgent challenge, with a projected 2026 deficit of N23.85 trillion
CFG Advisory calls for boosting domestic investment to ensure sustainable economic growth and exchange rate stability
Nigeria’s naira is likely to trade within the N1,400 to N1,500 per dollar range in 2026, supported by improving oil sector reforms, rising capital inflows and more resilient diaspora remittances, according to Tilewa Adebajo, chief executive officer of CFG Advisory.
Adebajo said clearer pricing signals in the oil and gas sector, better macroeconomic coordination and renewed investor confidence are gradually restoring stability to the foreign exchange market after years of volatility.
Source: Getty Images
Oil reforms and capital inflows drive stability
Speaking at the Finance Correspondents Association of Nigeria 2026 economic outlook forum, Adebajo said recent reforms are beginning to translate into measurable gains, particularly in foreign exchange supply.
He pointed to stronger foreign portfolio inflows, improved transparency in the energy sector and steady diaspora remittances as key factors supporting the naira outlook.
According to him, if fiscal deficits are contained, interest rates are better managed and economic growth resumes on a sustainable path, confidence in the naira will strengthen further.
However, he warned that deficit financing remains the biggest threat to exchange rate stability, noting that unchecked fiscal expansion could quickly erase recent gains.
At the official Nigerian Foreign Exchange Market, the naira closed flat on Monday, with the dollar quoted at N1,420.28, a slight 0.2 per cent depreciation from N1,417.95 on Friday, Central Bank of Nigeria data showed.
In the parallel market, the currency remained unchanged at N1,490 per dollar.
Growth outlook improves, but risks persist
According to a report by BusinessDay, CFG Advisory’s 2026 Outlook projects Nigeria’s gross domestic product growth at about 5 per cent, supported by expectations of single digit inflation, a monetary policy rate of 20 percent and a stable exchange rate within the N1,400 to N1,500 band.
Adebajo said Nigeria is approaching a critical point as it enters the third year of difficult economic reforms, stressing the need to convert reform gains into productivity-led growth.
He noted that the country must now target 8 to 10 percent GDP growth to lift productivity and improve living standards for over 140 million Nigerians living in multidimensional poverty.
Fiscal pressures raise red flags
Despite the improving outlook, Adebajo said fiscal discipline remains Nigeria’s most urgent challenge.
He cited a three-year cumulative budget deficit exceeding N50 trillion, a projected 2026 fiscal deficit of N23.85 trillion and persistent funding gaps for capital expenditure.
More concerning, he said, is the N15.2 trillion provision for debt service in the 2026 budget, which exceeds the combined allocations for defence, security, education and health. He described this imbalance as a serious policy warning.
Nigeria’s total public debt, estimated at over $100 billion, is increasingly crowding out growth-enhancing spending, with much of the savings from fuel subsidy removal now absorbed by debt servicing.
Portfolio inflows not a long-term solution
Responding to questions on rising foreign portfolio inflows, Adebajo cautioned that such investments are inherently volatile and should not be mistaken for long-term confidence.
He stressed that sustainable growth depends on domestic investment and foreign direct investment that expands productive capacity. According to him, quality spending on productive assets delivers stronger multiplier effects than consumption-driven expenditure.
Path to stronger FX reserves
To boost revenues and foreign exchange flows, Adebajo urged the federal government to sell down at least 49 per cent of its interest in 74 licensed concession assets, potentially raising about $50 billion.
He said the proceeds could improve government revenues, recapitalise the Nigerian National Petroleum Company and enhance transparency.
He also called for renewed investment in the oil and gas sector, noting that capital inflows have fallen from about $22 billion in 2009 and 2014 to less than $3 billion in 2024.
Restoring investment, he said, could raise production to 2.5 million barrels per day, easing pressure on the naira and strengthening reserves.
Source: Getty Images
Adebajo added that as inflation moderates, the Central Bank should consider cutting interest rates to stimulate growth, alongside deliberate policies aimed at disinflation, productivity and long-term exchange rate stability.
Naira breaks 13-year record, appreciates 6.5%
Legit.ng earlier reported that the naira closed 2025 on a historic note, recording its first full-year appreciation in more than a decade as foreign exchange reforms by the Central Bank of Nigeria (CBN) began to reshape market confidence.
Data from the apex bank show that the currency strengthened by 6.5 per cent year-on-year, ending December 31 at ₦1,435 to the dollar, compared with ₦1,535 at the close of 2024.
This marks the naira’s first annual gain since 2012, when it edged higher to ₦157.29 from ₦158.99 the previous year.
Source: Legit.ng
