Rewane Estimates Naira’s Fair Value at ₦1,257/$, Says Currency Undervalued by 11%
Renowned economist and Managing Director of Financial Derivatives Company (FDC), Mr Bismarck Rewane, has projected that the Nigerian naira’s fair value stands at approximately ₦1,257 to the United States dollar, suggesting that the currency is undervalued by about 11 per cent. Rewane based his assessment on the purchasing power parity (PPP) model, a commonly used economic framework for comparing currency values based on relative price levels across countries.
Rewane made the submission while delivering a keynote address at the 2026 Economic Outlook event organised by the Association of Corporate Treasurers of Nigeria (ACTN). During the session, he provided an in-depth analysis of both structural and cyclical factors shaping Nigeria’s exchange-rate movements, including inflation trends, productivity levels, capital flows, and external balances.
According to Rewane, currencies typically gravitate toward their PPP-implied values over a medium-term horizon of about five years. He stated that current PPP estimates place the naira’s appropriate exchange rate at roughly ₦1,256.79 to the dollar, reinforcing the view that the local currency is trading below its theoretical fair value. However, he noted that short-term market pressures, policy shifts, and investor sentiment often cause deviations from these benchmarks.
At the beginning of his presentation, Rewane emphasised that the core responsibility of corporate treasurers is the effective optimisation of their organisations’ liquid resources. He explained that this role requires a balance of prudence and opportunity, particularly in an environment marked by exchange-rate volatility and foreign-currency scarcity.
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He advised treasurers to adopt what he described as “cautious optimism,” especially when managing foreign-exchange exposure. According to him, treasury decisions related to currency risk, funding, and liquidity must be anchored in sound analysis rather than speculation, given the potential impact of exchange-rate swings on corporate balance sheets.
The event also featured a panel discussion involving senior treasury professionals, including Adeyinka Ogunnubi, Group Treasurer of CFAO Nigeria, and Titilola Osinowo, Group Head of Treasury and Investments at Ardova Plc. The panel focused on practical strategies for navigating Nigeria’s evolving financial and foreign-exchange landscape.
Osinowo highlighted several tools that treasurers could deploy to strengthen liquidity management and mitigate currency risk. She pointed to foreign-exchange swaps and options as instruments that should be explored more deliberately, stressing the need for a structured and disciplined approach to hedging.
She further underscored the importance of natural hedging, explaining that companies with dollar-denominated receivables could align their operating expenses with those inflows to reduce exposure to currency fluctuations. According to her, matching foreign-currency income with corresponding expenses helps stabilise cash flows and limits reliance on the spot foreign-exchange market.
Speaking on what he termed “smart allocations,” Ogunnubi, who also serves as the national president of ACTN, said treasury management is fundamentally about extracting maximum value from every unit of cash while minimising cost and risk. He noted that working capital management should remain the top priority for treasurers before considering longer-term or higher-yield investments.
Ogunnubi explained that companies sometimes move from net negative cash positions to net positive ones, a transition that presents important strategic choices. He said such situations raise critical questions around cash deployment, including whether to pay suppliers early, reduce liabilities, or allocate funds to other productive uses.
“Ultimately, it comes down to identifying the most efficient and optimal use of cash at any given point,” he said, adding that treasury decisions must align with the broader financial and operational goals of the organisation.
The discussions at the event reflected ongoing debates around Nigeria’s exchange-rate valuation, the gap between theoretical models and market realities, and the practical challenges faced by businesses operating in a volatile macroeconomic environment. While Rewane’s PPP-based estimate suggests that the naira may be undervalued, analysts note that factors such as import dependence, productivity constraints, and external shocks continue to influence the currency’s performance in the short to medium term.