IMF says naira still undervalued by 25.6% despite FX gains
By Aboki Forex —
The International Monetary Fund has said the Nigerian naira remains undervalued by about 25.6% even after recent gains against the dollar.
In its latest assessment of Nigeria's economy, the IMF said the naira should trade at around N1,130 to one dollar based on the country's economic fundamentals.
The Washington-based lender noted that the current exchange rate does not fully reflect improvements in Nigeria's external position and macroeconomic adjustments.
The IMF used its Real Effective Exchange Rate model to arrive at this figure. The model compares a country's currency against those of its major trading partners while adjusting for inflation.
The Fund advised the Central Bank of Nigeria to maintain exchange rate flexibility to close the valuation gap.
The naira has recovered some ground after sweeping foreign exchange reforms introduced by the Federal Government.