Nigeria’s Naira to drop by 6% in 2025, AfDB projects
African Development Bank (AfDB) has projected that the Nigerian naira will depreciate by at least six per cent between 2025 and 2026.
AfDB in its African Economic Outlook 2025 cited growing global financial market volatility as a key factor.
Going further, the AfDB report anticipates currency depreciation in 21 African countries by 2025 which includes Egypt, Ethiopia, Ghana, Libya, Rwanda, Zambia, and Zimbabwe.
While the report attributes the declines to projected drops in export earnings, which are likely to increase pressure on national currencies; it is important to note that some currencies are, however, expected to buck the trend.
Those in Kenya, Morocco, and the CFA franc zone are projected to appreciate by more than 3% against the US dollar, driven by relatively stronger market fundamentals.
Looking back, 2023 saw 28 African nations experience currency depreciation, 17 of these countries managed to reverse some of those losses or recorded slower rates of decline in 2024.
For example, South Africa’s rand, which weakened by 11.3per cent in 2023, appreciated by 0.7per cent year-on-year.
Kenya’s shilling also made a comeback, appreciating by 3.1per cent in 2024 after falling 15.4per cent the previous year.
The Kenyan shilling’s rebound was largely due to positive market sentiment, following the successful issuance of $1.5 billion in Eurobonds.
This allowed Kenya to repurchase a $2 billion Eurobond due in June 2024, resulting in a dramatic 121per cent rise in portfolio investment inflows, reversing the $233.4 million in net outflows recorded in June 2023.
On the flip side, countries like Guinea, Mauritania, and Seychelles continue to face currency depreciation due to macroeconomic instability and fragile investor sentiment.
Most other African currencies remained relatively stable or appreciated, particularly those pegged to the euro.
These include the CFA franc, Cabo Verdean escudo, São Tomé and Príncipe dobra, and the Comoros franc, all of which benefited from the euro’s recovery against the dollar in 2024.
