JP-Morgan lauds Nigeria’s market-friendly reforms, predicts Naira at N1,450 by year end

GLOBAL investment bank JP-Morgan has lauded Nigeria’s commitment to market-friendly economic reforms, expressing renewed confidence in the country’s macroeconomic trajectory and policy direction.

In a recent report, the bank projected that the Nigerian naira would appreciate to N1,450 per US dollar by the end of 2025, citing ongoing fiscal and monetary policy changes that are beginning to yield results.

JP Morgan highlighted several key reforms undertaken by the Nigerian government, including the removal of fuel subsidies, unification of exchange rates and steps towards greater transparency in foreign exchange (FX) management. These actions, according to the bank, are improving investor confidence and setting the stage for sustainable economic growth.

“Nigeria’s local markets remain our top trade recommendation within frontier markets,” JP Morgan stated, adding that the country is largely insulated from U.S. economic slowdowns and offers strong yield opportunities. The firm noted that despite broader global risks, Nigeria’s frontier market dynamics remain favorable, supported by substantial policy shifts and economic resilience.

The report revealed that JP Morgan recently rolled its maturing Nigeria Treasury bill investment into a new Open Market Operation (OMO) bill, maintaining its bullish stance on Nigerian debt instruments.

The move comes as the Central Bank of Nigeria (CBN) published net FX reserves for the first time, a development the bank described as a critical step toward improving transparency and investor confidence.

According to the CBN, Nigeria’s net FX reserves stood at $23.3 billion at the end of 2024, up from $4 billion in 2023. Gross reserves rose to $40.9 billion from $33 billion. The $11.2 billion reduction in encumbered reserves over the past year indicates improved reserve quality and suggests less pressure on the naira going forward.

“This improvement in FX reserve quality and transparency supports our expectation that the USD/NGN rate will ease to around N1,450 by year-end,” JP Morgan noted. “Now that net reserves data are available, the central bank may slow the pace of accumulation, which should reduce pressure on the exchange rate.”

The bank also cited the recent shake-up in the management of the Nigerian National Petroleum Company (NNPC) Limited as a medium-term catalyst. It views this change as a pivotal step in broader oil sector reforms aimed at increasing transparency and efficiency. While immediate increases in oil output may be limited, JP Morgan believes a private-sector-driven NNPC could enhance FX flows to the CBN and support economic stability.

Additionally, upcoming foreign exchange financing arrangements involving the NNPC could inject up to $9.5 billion into Nigeria’s FX market. If finalized, these deals—collateralized with future oil production—could clear existing petrol import arrears and further boost FX reserves.

With a strong current account surplus of $17.5 billion last year and major reforms already in motion, JP Morgan maintains its bullish view on Nigeria. The firm anticipates possible declines in both short-term and long-tenor bond yields in the second half of 2025, driven by declining inflation and a more accommodative monetary stance.

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