Fitch Ratings Projects Nigerian Naira to End Year at N1,450 to the Dollar

 A global rating agency, Fitch Ratings, has projected that the Nigerian naira will conclude the year at N1,450 to the dollar.

Fitch Ratings indicated that despite the naira's volatility since its floating in June 2023, fluctuations are expected to stabilize by the third quarter (Q3) of 2024.

Gaimin Nonyane, Director for Middle-East and Africa Sovereigns at Fitch Ratings, shared this outlook during a post-sovereign rating webinar focused on Nigeria and Egypt.

“The naira is still finding its feet. It is still in price discovery mode, so we expect a lot of volatility in the near term,” Nonyane stated.

“However, we anticipate multilateral donor funding in Q3 this year, along with improved oil receipts, which should help reduce volatility somewhat by Q3.”

Fitch projects that the naira will average around N1,200 per dollar this year and end the year at approximately N1,450 per dollar. Looking ahead to next year, they foresee a gradual depreciation, contingent on the momentum of foreign exchange reforms.

“Currently, the current account surplus is low, below one percent of GDP. Despite experiencing some surpluses, they are still not significant. If we see sustained reduction in inflation and greater stability in the foreign exchange markets, coupled with stronger tax revenue, it could potentially lead to an upgrade,” Nonyane explained.

She also noted, “The low tax revenue base has contributed to the government’s very high interest-to-revenue ratio, which currently stands at 38 percent. This is about four times more than the B rating median and is a key rating consideration.”