The International Monetary Fund (IMF) has said the Nigerian naira is still trading below its fair value despite recent gains against the US dollar in both the official and parallel foreign exchange markets.
In its latest assessment of Nigeria’s economy, the Fund estimated that the naira remains undervalued by about 25.6 per cent when measured against the country’s economic fundamentals.
According to the IMF’s Article IV Consultation Report, the local currency has strengthened since Nigeria introduced major foreign exchange reforms, but its current market rate still does not fully reflect improvements in the country’s external position and broader macroeconomic conditions.
Using its Real Effective Exchange Rate model, the IMF estimated that the naira’s fair value should be stronger than its present official rate, placing it at roughly N1,142 to the dollar based on end-2025 figures.
The Fund noted that Nigeria’s exchange rate reforms, including the move toward a more market-driven system, have helped improve investor confidence and restore some stability to the foreign exchange market.
However, it advised the Central Bank of Nigeria to maintain exchange rate flexibility and avoid excessive reserve accumulation, arguing that allowing the naira to move more freely alongside broader fiscal and structural reforms would help close the valuation gap over time.
The IMF’s latest position is likely to reignite debate over the naira’s true value, especially as Nigeria’s external reserves continue to improve amid higher oil receipts, diaspora remittances, and returning foreign portfolio investments.
