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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.

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M
matthew

What impact would adjusting the naira to ₦1,142 per dollar have on everyday Nigerians and businesses across different sectors?

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H
hala

Indeed, aligning the naira closer to ₦1,142 could improve investor confidence but may raise import costs for consumers.

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L
lily

IMF's Real Effective Exchange Rate model focuses on long-term fairness, but short-term market forces and policy changes often drive actual naira value fluctuations.

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E
emeka

IMF model says ₦1,142, but nobody dey see that rate for open market, so its estimate misses real trading conditions.

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G
grace

To correct the naira's undervaluation, policymakers should expand export incentives and attract foreign investment to boost dollar inflows sustainably.

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