Global investment bank JP Morgan has commended Nigeria’s ongoing market-oriented economic reforms, expressing increased confidence in the country’s macroeconomic outlook and policy direction.
In its latest report, the bank projected that the Naira could appreciate to ₦1,450 per US dollar by the end of 2025, driven by a series of fiscal and monetary policy adjustments that are beginning to yield tangible results.
Reform Highlights and Market Outlook
JP Morgan applauded key reforms undertaken by the Nigerian government, including:
- Fuel subsidy removal
- Unification of exchange rates
- Improved transparency in foreign exchange (FX) management
These measures, according to the bank, are strengthening investor sentiment and laying the groundwork for more sustainable economic growth.
“Nigeria’s local markets remain our top trade recommendation within frontier markets,” the bank stated, highlighting the country’s strong yield environment and limited exposure to U.S. economic slowdowns.
The bank reaffirmed its bullish stance by rolling over its maturing Nigeria Treasury bill investment into a new Open Market Operation (OMO) bill, citing continued confidence in Nigerian debt instruments.
Boost in FX Reserves and Transparency
A key development underpinning JP Morgan’s positive outlook is the Central Bank of Nigeria’s (CBN) recent publication of net FX reserves data — a move hailed as crucial for rebuilding investor trust.
According to the CBN:
- Net FX reserves stood at $23.3 billion as of the end of 2024, up from $4 billion in 2023
- Gross reserves climbed to $40.9 billion, compared to $33 billion a year prior
The $11.2 billion reduction in encumbered reserves signals improved reserve quality, potentially easing pressure on the naira.
“This improvement in FX reserve quality and transparency supports our expectation that the USD/NGN rate will ease to around ₦1,450 by year-end,” JP Morgan noted.
“With net reserves now disclosed, the CBN may slow FX accumulation, reducing pressure on the exchange rate.”
Oil Sector Reforms and FX Support
JP Morgan also pointed to the recent management overhaul at the Nigerian National Petroleum Company (NNPC) Limited as a potential medium-term catalyst. The firm views the shift as part of broader reforms to enhance transparency and efficiency in the oil sector.
While immediate gains in crude output may be limited, the bank believes a more commercially driven NNPC could bolster foreign exchange inflows to the central bank and contribute to economic stability.
Upcoming foreign exchange financing arrangements involving the NNPC — potentially injecting up to $9.5 billion into the FX market — were also flagged as critical. These deals, collateralized by future oil production, could help clear petrol import arrears and further strengthen reserves.
Looking Ahead
Backed by a current account surplus of $17.5 billion in 2024 and an improving policy landscape, JP Morgan remains bullish on Nigeria. The bank expects declining inflation and a more accommodative monetary policy stance in the second half of 2025 to result in lower bond yields across short- and long-term instruments.
