Nigeria’s naira could stage a meaningful recovery in 2026, strengthening to between N1,350 and N1,450 per dollar, as foreign exchange reforms, improving liquidity, and easing inflation begin to reshape the macroeconomic landscape, according to CardinalStone Partners.
The projection is contained in the firm’s 2026 economic outlook report, “Indicators Align for Sustained Macro Gains,” published on January 6, 2026. The report outlines a more supportive environment for the currency and prices, even as it cautions that global oil market weakness and rising domestic insecurity could still test the durability of the gains.
After years of sharp depreciation and volatility triggered by FX market reforms, devaluations, and persistent dollar shortages, CardinalStone said the naira’s outlook is improving as fundamentals gradually align.
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“We expect Naira to appreciate to a range of N1,350.00/$ – N1,450.00/$ in 2026, supported by improving fundamentals,” the report stated.
At the core of this view is a belief that recent reforms in Nigeria’s foreign exchange market are beginning to yield results. CardinalStone points to improved price discovery, better transparency, and stronger FX liquidity as factors that could help stabilize the currency. With inflation expected to moderate and confidence slowly returning to the FX market, the firm argues that pressure on the naira could ease further in 2026.
This optimism comes against a less supportive global oil backdrop. CardinalStone expects crude oil prices to weaken in 2026 due to oversupply and softer global demand, a scenario that would normally spell trouble for Nigeria’s FX earnings.
“Elsewhere, due to oversupply and weaker demand, crude oil prices are likely to be lower,” the report said.
Lower oil prices reduce dollar inflows from exports and government revenue, but CardinalStone believes Nigeria’s FX outlook may prove more resilient this time. Structural changes in the FX market, coupled with improved capital flows and reduced distortions, are expected to help cushion the impact of weaker crude prices.
The firm’s outlook also extends to domestic energy prices, which have been a major driver of inflation and cost pressures over the past two years. CardinalStone projects that a combination of weaker global oil prices and a firmer naira could translate into lower fuel costs in 2026.
“The weak oil price, coupled with an improving FX outlook, should further drive down the domestic prices of AGO and PMS,” the report noted.
This would mark a notable shift after repeated fuel price increases following subsidy removal and currency weakness. Lower prices for Automotive Gas Oil and Premium Motor Spirit would ease transport and logistics costs, offering relief to households and businesses, particularly in manufacturing and trade.
CardinalStone also highlighted rising competition in Nigeria’s downstream petroleum sector as a stabilising factor. Increased supply from local refineries, alongside continued imports, is expected to limit price spikes and improve market efficiency.
“More so, competition in the domestic market between local refineries and importers bodes well for the local energy price outlook,” the firm said.
On inflation, the outlook is cautiously optimistic. CardinalStone expects headline inflation to trend lower in 2026 as currency pressures ease and energy costs decline. However, it warned that insecurity, especially in food-producing regions, remains a significant threat to price stability.
“Nonetheless, we note the increased traction of insecurity as a risk factor, especially in food-producing regions, which could limit food supply,” the report said.
Food inflation has been a major contributor to Nigeria’s elevated headline inflation in recent years, and disruptions to farming and distribution continue to pose risks. CardinalStone also flagged pre-election year spending as another factor that could complicate the inflation outlook, given its historical tendency to fuel demand and strain fiscal balances.
Taking these dynamics into account, the firm forecasts that headline inflation will ease to an average of 15.5% in 2026 and close the year at 13.9%. While still elevated by historical standards, this would represent a significant improvement from recent peaks.
The broader implications of the outlook are substantial. A stronger naira would help reduce imported inflation, stabilize consumer prices, and improve planning for businesses dependent on foreign inputs. Easing inflation and lower energy costs could support purchasing power and help unlock a more durable economic recovery.
Still, CardinalStone’s projections underscore that the outlook is finely balanced. Security challenges, fiscal discipline ahead of elections, and swings in global oil markets remain critical variables. Sustaining currency stability and disinflation, the firm suggests, will require continued reform momentum and improved domestic stability.
Nigeria’s exchange rate has endured sharp swings in recent years following FX liberalization and persistent dollar shortages, while inflation has remained stubbornly high due to food prices, energy costs, and currency weakness. Against that backdrop, 2026 is shaping up as a pivotal year for testing whether recent policy changes can deliver lasting macroeconomic stability.
CardinalStone also projects that global oil prices will average $55.08 per barrel in 2026, reinforcing its view that Nigeria’s economic outlook will depend less on crude prices and more on structural improvements in FX management, energy supply, and inflation control.