Naira faces new pressure due to strong dollar and fuel costs

The naira may face new pressures in the near term as the strengthening US dollar, rising oil costs and persistent demand for foreign currency complicate the Central Bank of Nigeria’s efforts to maintain currency stability.

Market expectations are tilted towards a cautious stance in terms of monetary policy, with the CBN likely to maintain its benchmark monetary policy rate at 26.5% as policymakers balance inflation moderation with risks from energy prices, exchange rate pressures and weak economic growth.

The CBN Monetary Policy Committee last held the MPR at 26.5% at its July 20-21 meeting, while maintaining the liquidity reserve requirement for depository banks at 45%. The central bank said heightened global uncertainties and potential pass-through from energy prices warrant a cautious policy stance.

The latest data from the Office for National Statistics shows that headline inflation fell to 15.39% in August 2026, while food inflation stood at 19.57% and core inflation at 13.29%.

However, the moderation of inflation is being tested by new increases in energy and transport costs. Reuters reported on Monday that petrol prices rose to around N1,400 per liter in Lagos and Abuja, while diesel prices surpassed N2,000 per liter due to rising global oil prices.

Analysts say the combination of high domestic interest rates and improved foreign currency liquidity has provided important support to the naira, but structural demand for dollars could limit further appreciation.

CardinalStone had forecast a 2026 naira range of between 1,350 and 1,450 naira per dollar, citing improved forex liquidity, stronger external balances and sustained transparency in the foreign exchange market. Its mid-year assessment also states that the currency has been trading broadly within that range.