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Goldman Sachs Cuts Naira Forecasts Amid High Yields

By Markets Desk · 2026-09-20 · 1 min read
A stack of banknotes resting on a wooden desk next to a small, dark glass bottle of crude oil
Illustration: Tradingbird

Goldman Sachs has lowered its near-term forecasts for the Nigerian Naira, projecting a 12-month value of 1,250 against the US dollar. The bank attributes this bullish outlook to sustained oil revenues and high interest rates.

Goldman Sachs lowered its three-month forecast for the US Dollar to Nigerian Naira exchange rate to 1,300 from 1,325. The six-month projection was reduced to 1,275 from 1,300. The 12-month target remains at 1,250, a level roughly 5.7% below the September 17 reference point.

According to Exchange Rates UK, these adjustments reflect a strengthening in near-term exchange rate forecasts. Analysts argue that oil revenues and high yields provide a solid foundation for further gains. The bank views the current environment as increasingly skewed towards currency appreciation.

Oil Prices Drive Export Revenue

Elevated oil prices support Nigeria’s export earnings. Goldman Sachs expects shipping disruptions in the Middle East to persist into 2027. This prolongs high energy costs for importers while boosting revenue for exporters like Nigeria.

The bank’s valuation model indicates the Naira remains deeply undervalued. This leaves more scope for exchange-rate gains than seen in the Kazakh Tenge. High interest rates on Nigerian assets further enhance the appeal of holding the currency.

High Yields Offer Investor Returns

Average yields on open-market-operation securities exceed 20 percent. These securities have maturities of more than 14 days. Inflation-adjusted yields are estimated to be above 5 percent, near the highest levels since 2015.

This high interest environment creates a positive carry for investors. It supports the Naira by attracting capital inflows. The combination of export earnings and investment returns strengthens the currency's position.

Reserve Policy Limits Appreciation Speed

The central bank’s accumulation of foreign reserves limits the Naira’s appreciation. Buying foreign currency restrains local currency strength. Absorbing domestic liquidity from these purchases carries a high cost when interest rates are elevated.

Goldman Sachs notes that policymakers prefer gradual appreciation. This policy choice acts as a constraint on the speed of reaching the 1,250 target. The bank allows for a slower adjustment path rather than an immediate move.

Based on reporting by Exchange Rates UK, compiled by the Tradingbird desk.

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