IMF: Naira Still 25.6% Undervalued, Fair Rate Should Be Around ₦1,142 per Dollar

The International Monetary Fund says the naira remains 25.6% below its fair value despite recent gains against the dollar. Its Real Effective Exchange Rate model suggests a trading level near ₦1,142/$ based on end-2025 rates. Since Nigeria’s June 2023 FX reforms freed the currency and removed multiple rate windows, the naira has lost ground even as reserves rose. The IMF notes official rates moved from about ₦1,535/$ in late 2024 to ₦1,435/$ by end-2025. On average, however, the currency weakened from ₦1,479/$ in 2024 to ₦1,520/$ last year, implying a 2.8% annual depreciation. This contrasts with the REER appreciation of 32% in 2025, leaving a significant valuation gap. To address this, the fund urges the Central Bank to slow reserve accumulation, keep two-way exchange flexibility and push further fiscal and structural reforms, especially those boosting non-oil sectors.

Use The App To Win ₦1m

Stories are shared by community members. This article does not represent the official view of NaijaWorld — the author is solely responsible for its content.