IMF Warns Naira Trades 25% Below Economic Fundamentals

The IMF’s latest Article IV report says the naira remains about 25.6% undervalued despite recent forex reforms. According to its Real Effective Exchange Rate model, the naira appreciated 32% in 2025 but still falls short of levels justified by Nigeria’s economic fundamentals. The official rate strengthened from ₦1,535 to ₦1,435 per dollar, yet on an annual average basis the currency weakened by 2.8%. The Fund advises continued exchange-rate flexibility, slowing reserve accumulation and deepening market reforms. It also urges stronger fiscal management and non-oil sector growth to help close the valuation gap over time.

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