Nigeria’s naira may be significantly overvalued, raising questions about its sustainability beyond 2025 as import demand recovers and fiscal risks mount.
A new report by Renaissance Capital Africa estimates the naira is overvalued by about 26 percent compared to its 25-year real effective exchange rate (REER) average. That figure jumps out even after adjusting for inflation and GDP rebasing, both of which have improved official optics but may be masking deeper structural imbalances.
“The naira is now the most expensive currency in Africa on a REER basis,” the report said, warning that current levels are unlikely to hold if oil prices stay subdued and imports rise.
