In 12 months, the Nigerian Naira would appreciate to N1200, Goldman Sachs said in its latest report titled "Nigeria-Turning the Corner".

The report stated that the forecast is hinged on a combination of positive real rates, capital inflows, and evidence of a shift to a more orthodox policy setup.

“We think that Nigeria is turning the corner following its recent currency crisis. These developments have prompted us to shift to a constructive outlook for the Naira, which our FX strategists expect to appreciate to N 1200 vs. the USD in 12 months,” the report said.

“Nigeria is finally emerging from a period of monetary policy transition characterised by the absence of a credible policy anchor and deeply negative real interest rates,” it further stated.

The report said the lack of credible policy has implied a volatile and sharp depreciation of the Naira in recent months and a cumulative 60-70 percent weakening of the currency over the past nine months.

However, the report by Goldman Sachs mentioned that the policy steps implemented to date are only a first step in the right direction, and more follow-through is required to achieve a durable macrostabilization.

It said that the main risk to its outlook is that the authorities do not follow through on the shift to a more orthodox monetary set-up.

“The main risk to our more constructive outlook is that the authorities do not follow through on the shift to a more orthodox monetary set-up that they have articulated and do not tighten policy appropriately to attract the capital inflows required to ease fiscal and external financing constraints,” she said.

In a similar report, the World Bank stated that the economic outlook for Nigeria in the short to medium term hinges on the continuation and effectiveness of its macroeconomic stabilisation agenda.

According to the multilateral lender, successful implementation of the initiated reforms will be the first step towards improving Nigeria’s growth prospects.

With the implementation of these first macroeconomic stabilization reforms, the economy is expected to grow at an average annual rate of 3.5 percent during 2023–2026, or 0.5 of a percentage point higher than in a scenario in which the reforms had not been implemented.

Services, especially banking and ICT, together with industry, will benefit from a more stable and predictable macroeconomic environment and easier access to FX and imported inputs.

Moreover, the reform of the gasoline subsidy should help NNPC settle its arrears and start paying fully for the Federation’s share of costs in joint venture operations, thereby allowing oil production to gradually increase over time.