The naira is expected to remain largely stable over the next six months, while borrowing costs are projected to decline as inflation continues to moderate, according to the latest Business Expectations Survey (BES) released by the Central Bank of Nigeria (CBN).

The survey showed that respondents expect the naira to strengthen from an index of 28.8 points currently to 42.2 points by May 2026, extending the rare period of currency stability recorded in 2025.

Borrowing rates are also projected to ease over the same period, with the index declining from 15.4 points to 11.7 points, reflecting expectations of softer monetary conditions as inflation pressures abate.

“Respondents expect the naira–US dollar exchange rate to steadily appreciate across the review periods, as indicated by the positive indices. They also anticipate a continuous positive outlook for borrowing rates during the same periods,” the BES report, which surveyed about 1,900 businesses nationwide, stated.

The naira has experienced an unusually long stretch of stability in recent months, following sharp volatility last year when the currency lost about 41 per cent of its value after the unification of exchange rates and the move to a more market-determined system.

Although the currency has recently come under mild pressure due to increased foreign exchange demand by local corporates to meet import obligations during the festive season, analysts expect stability to be sustained. This outlook is supported by the CBN’s calibrated interventions to manage excess volatility, alongside continued inflows from foreign portfolio investors.

To rein in inflation, the CBN has maintained a tight monetary stance, keeping benchmark interest rates largely unchanged since last year. The apex bank implemented only a marginal cut of 50 basis points at its penultimate Monetary Policy Committee meeting in 2025, leaving the Monetary Policy Rate (MPR) at 27 per cent, even as asymmetric corridors were adjusted to support credit expansion.

With inflation projected to decline to single-digit levels in 2026, from 14.45 per cent recorded in November 2025, analysts say monetary authorities may have greater room to begin a gradual easing cycle, potentially improving credit access for businesses.

Despite the improving macroeconomic outlook, the BES highlighted persistent structural challenges facing businesses, with insecurity and high, multiple taxation ranking as the most significant constraints.

“Respondents identified Insecurity (70.1), High/Multiple Taxes (69.7), Insufficient Power Supply (69.3), High Interest Rate (67.2), and Financial Problems (64.7) as the top five business constraints in November 2025,” the report said, noting that these factors continue to weigh on operational stability and profitability.

Other constraints identified among the top ten include poor infrastructure and an unfavourable political climate, both scoring 57.7 points.

The report observed that business concerns during the review period were more heavily skewed towards financial and operational challenges rather than political risks, underscoring the need for sustained reforms to improve the operating environment for enterprises. (Nigerian Tribune)