Nigeria's naira to face modest pressure in 2026 due to rate cuts and falling crude prices, Citigroup predicts.

Nigeria's naira may weaken to between 1,650 and 1,700 per dollar by mid-2026 due to a central bank rate cut and falling crude prices. Citigroup expects modest pressure on the currency as inflation slows and the central bank eases its tight monetary policy stance. Initial pressure may come from outflows of portfolio investments, currently valued at around $9 billion. The naira has appreciated by 3.6% this year, partly due to stronger oil export earnings and dollar sales by the central bank.

The Nigerian naira is expected to weaken to between 1,650 and 1,700 per dollar by mid-2026, according to Citigroup. This prediction comes on the heels of anticipated monetary easing by the Central Bank of Nigeria (CBN) and a potential decline in crude oil prices. The naira has appreciated by 3.6% this year, largely driven by stronger oil export earnings and dollar sales by the central bank.

The CBN's Monetary Policy Committee (MPC), led by Governor Olayemi Cardoso, is expected to announce a 50 basis-point reduction in the benchmark rate from 27.5% to 27% on Tuesday, September 23, 2025 Nigeria Set for First Rate Cut in Three Years as Inflation Slows^[1]. This would be the first interest rate cut since the Covid-19 pandemic, marking a shift in monetary policy after more than two years of aggressive tightening. The move is driven by a slowing inflation rate, which has eased for the fifth consecutive month, reaching 20% in August.

Nigeria's decision to ease monetary policy is in line with global trends, as the US Federal Reserve has been lowering borrowing costs. This global context is expected to provide room for the CBN to act without triggering significant capital outflows. However, some institutions remain cautious, with Societe Generale predicting that the MPC will hold rates in September while preparing markets for a formal easing cycle later this year Nigeria Set for First Rate Cut in Three Years as Inflation Slows^[1].

The anticipated rate cut is expected to exert modest pressure on the naira, with initial pressure potentially coming from outflows of portfolio investments, currently valued at around $9 billion. The upcoming harvest season is also expected to ease food price pressures, which traditionally contribute significantly to consumer inflation.

The decision to ease monetary policy will be closely monitored by investors as Nigeria seeks to balance inflation control with supporting economic recovery. The upcoming harvest season and rising crude oil output are expected to provide additional support for economic growth. The CBN's announcement is scheduled for 2 p.m. in Abuja.