Nigeria's Central Bank Cuts Rates as Shettima Projects Naira Rally to N1,000 Per Dollar
Vice President Kashim Shettima predicts Nigeria's economy will shift from stabilization to acceleration in 2026, with the naira reaching N1,000 per dollar within weeks, as the Central Bank of Nigeria delivers a cautious rate cut amid inflation falling to an 11-year low.
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Nigeria's Vice President Kashim Shettima has projected the naira will strengthen to N1,000 per dollar "in a matter of weeks," marking an ambitious 26.4% appreciation target from current levels, as the Central Bank of Nigeria (CBN) delivered a cautious monetary policy easing following inflation's decline to an 11-year low.
Speaking at a gathering of All Progressives Congress leaders and state governors, Shettima declared the economy would transition "from stabilisation to acceleration in 2026," according to This Day newspaper. The projection comes as the naira traded at N1,359 per dollar in the Nigerian Foreign Exchange Market (NFEM) on Tuesday, depreciating from N1,353.5 per dollar in the previous session, while holding steady at N1,360 per dollar in the parallel market, Central Bank of Nigeria data showed.
Monetary Policy Shift Amid Disinflation
The CBN's Monetary Policy Committee delivered a rate cut on Tuesday, the first easing in the current cycle as inflation decelerated to levels not seen since 2015. Business Day reported the central bank proceeded with caution, balancing disinflation trends against election-related uncertainties and external pressures on the currency. The Nigeria Employers' Consultative Association (NECA) welcomed the rate reduction, signaling business community support for looser monetary conditions.
The rate cut represents a significant policy pivot for the CBN, which had maintained a hawkish stance through 2024 and early 2025 to combat inflation that peaked above 30% in 2024. The deceleration to an 11-year low suggests the aggressive tightening cycle implemented under CBN Governor Olayemi Cardoso has begun yielding results, creating room for monetary easing to support economic growth.
Currency Dynamics and Policy Credibility
Shettima's projection of N1,000 per dollar exchange rate contrasts sharply with current market conditions and recent currency performance. The naira has depreciated 0.4% in the official market this week alone, according to CBN data cited by Vanguard News. Achieving the vice president's target would require reversing months of gradual depreciation and implementing significant policy interventions or attracting substantial foreign exchange inflows.
The parallel market premium—the gap between official and black market rates—has narrowed to just N1 per dollar, suggesting improved forex liquidity and reduced arbitrage opportunities. This convergence indicates the CBN's unified exchange rate system, implemented in June 2023, has gained traction in reducing market fragmentation. However, sustaining a rally to N1,000 per dollar would require addressing Nigeria's structural forex challenges, including limited non-oil export earnings and foreign investment flows.
Economic Acceleration Agenda
The Tinubu administration's "Renewed Hope Agenda," which Shettima referenced in his remarks, encompasses fiscal reforms, subsidy removal, and efforts to attract foreign direct investment. The government has implemented controversial policies including petrol subsidy elimination and electricity tariff adjustments, measures designed to reduce fiscal deficits and create space for infrastructure investment. These reforms have contributed to inflation pressures but are viewed by policymakers as necessary for long-term economic stability.
The Nigerian Stock Exchange reflected mixed sentiment following the CBN's rate decision, with equities snapping a winning streak according to Business Day. The market's reaction suggests investors are weighing the benefits of lower borrowing costs against concerns about currency stability and the feasibility of government projections. Banking sector stocks, which typically benefit from high interest rate environments, may face pressure from compressed net interest margins as rates decline.
Forward-Looking Challenges
Nigeria faces several headwinds that could complicate the currency appreciation timeline. Oil production remains below OPEC quotas due to security challenges and underinvestment, limiting foreign exchange earnings from the country's primary export. The International Monetary Fund projects Nigeria's GDP growth at 3.3% for 2026, below the sub-Saharan African average, raising questions about whether economic acceleration can be achieved without addressing productivity constraints and infrastructure deficits.
The CBN's foreign exchange reserves, which stood at approximately $37 billion in early February 2026, provide limited buffer for sustained currency intervention. Achieving and maintaining the N1,000 per dollar target would likely require a combination of increased oil revenues, foreign portfolio investment inflows, and continued monetary policy credibility. Market participants will closely monitor whether the government can deliver on infrastructure projects and security improvements that would support investor confidence and currency stability in the months ahead.