Standard Bank has revised its medium-term outlook on the Nigerian naira, projecting a 3.1% depreciation against the US dollar in 2025 but at a stronger level than it had previously forecast.
In its latest projection, the bank now expects the naira to close 2025 at N1,585.5/$1, compared with its earlier forecast of N1,697.5/$1. The revision, it explained, follows fresh evidence from Nigeria’s foreign exchange market and broader macroeconomic trends that point to a more stable trajectory for the currency.
“Based on some new evidence and how activities have panned out in the past month, we now amend our medium-term views on the USD/NGN pair. Specifically, we now expect the NGN to depreciate by a modest 3.1% against the USD in 2025, likely ending this year at N1,585.5 (previous forecast: N1,697.5) and settling at N1,692.6 by December 2026, and with a higher possibility of the currency ranging stronger, rather than lower, over the forecast horizon,” the bank stated.
Looking beyond 2025, Standard Bank flagged Nigeria’s approaching political cycle as a key risk factor. It noted that electioneering activities ahead of the 2027 general elections could put pressure on the currency, as both campaign spending and dollar demand typically surge during such periods.
“Electioneering activities are key factors stakeholders should consider as a likely driver of the USD/NGN pair in 2026 and 2027. Primary election activities are expected to begin in Q1 2026, with campaigns for the 2027 general election expected to be in full swing from Q3 2026. These activities are likely to lead to an increase in dollar demand, which, in addition to increased fiscal spending, should support an increase in money supply,” the report stated.
Even so, the bank expressed confidence that the Central Bank of Nigeria’s stronger FX reserve position should provide the apex bank with room to mitigate USD/NGN upside pressures.
The bank also highlighted how the start of operations at the Dangote Refinery has altered Nigeria’s oil trade balance. It noted that the decline in crude oil exports since Q2 2024 was largely due to higher domestic crude sales to the Lagos-based refinery.
“Indeed, after outstripping gas sales, crude oil exports declined to a quarterly average of $8.62bn in Q2 2024–Q4 2024, down from $10.99bn in Q1 2024, when the Dangote Refinery started operations,” the bank reported.
At the same time, the refinery’s local refining capacity has helped Nigeria reduce its dependence on imported petroleum products.
“The reduction in petroleum imports due to Dangote Refinery-induced local refining ensured that oil imports declined for a third consecutive quarter, to a 17-quarter low of $2.68bn,” the report added.
However, that relief was offset by a sharp rise in imports of other goods. Non-oil imports surged 24.1% quarter-on-quarter in Q4 2024, accounting for more than 73% of total imports. This pushed Nigeria’s overall imports up by 9.3% in the period, to $10.05bn.
The projection comes against the backdrop of President Bola Tinubu’s 2025 budget speech in December 2024, where he forecast inflation falling from 34.6% to 15% and the exchange rate strengthening from N1,700/$1 to N1,500/$1.
Those assumptions were widely doubted by analysts at the time. With Standard Bank now forecasting N1,585.5/$1 for 2025, the bank’s outlook appears closer to Tinubu’s official target — though still signaling a weaker naira.
How It Compares With the IMF, World Bank
In its 2025 Article IV review, the IMF didn’t publish a specific USD/NGN end-year target, but it did say the naira has shown signs of stabilizing as tighter policy and FX-market reforms took hold, while urging continued fiscal/monetary coordination, a market-clearing FX regime, and reserve rebuilding. In tone, that’s consistent with Standard Bank’s “modest depreciation with stronger-bias risks” — but the IMF frames it as policy-dependent stabilization rather than a level call.
The World Bank’s 2025 Nigeria Economic Update similarly avoids hard exchange-rate targets, but noted reserve buffers and the authorities’ reform push, while flagging inflation, FX backlogs, and external shocks as ongoing risks to macro stability. The read-through: a constructive but conditional stabilization view, broadly compatible with Standard Bank’s softer depreciation path.
Thus, some economists believe the Standard Bank’s outlook underlines how Nigeria’s economy sits at a crossroads. While the Dangote Refinery is easing the country’s import bill, political risks, high non-oil imports, and inflationary pressures continue to threaten exchange rate stability.
For businesses and investors, the bank’s forecast suggests some relief compared to earlier fears of a much sharper depreciation.
