Naira Could Hit N984.7/$ Fair Value, Below N1,000 in 12 Months, MDU Capital Says
By Aboki Forex —
The naira could strengthen to below N1,000/$ within the next 12 months, with analysts at MDU Capital Limited putting the currency’s fair value at N984.7/$.
In a research note titled “Nigerian Naira: Valuation Gap Points to a Potential Sub-N1,000/$1 Path Over the Next 12 Months,” the firm said its valuation showed a significant gap between the naira’s market rate and its estimated fundamental value.
Three Models, One Fair Value
MDU Capital arrived at its valuation using three measures: the money-supply model, the forward-rate model, and its blended valuation model.
Under the money-supply approach, the naira’s fair value is about N987/$. The forward-rate estimate stands at approximately N1,043/$. The blended model, which gives 90 per cent weight to the money-supply valuation and 10 per cent to the forward-rate estimate, produced a fair value of N984.7/$.
The firm explained that the money-supply model uses “the most liquid tranche of M2, proxied by broad monetary base,” and the fair-value estimate “depreciates as M2 growth outpaces external reserves growth.” The forward-rate model is based on the “derived uncovered interest-rate parity,” reflecting the relationship between Nigerian and US interest rates and the forward exchange rate. The blended model is “anchored to fundamentals with a market-pricing cross-check.”
Market Rate Above Fundamental Value
MDU Capital argued that the naira’s recent pricing in the foreign exchange market remained above its fundamental valuation.
“The MZM-implied rate has tracked spot closely in periods of pricing efficiency. The wide dispersion recorded since 2024 signals pricing above fundamental value,” the firm stated.
It noted that the money-supply measure was “the most useful as a fair-value benchmark.”
12-Month Scenario: N933/$ by June 2027
MDU Capital’s 12-month scenario projects further appreciation of the naira if the valuation gap gradually closes. The house view puts the naira at N933/$ by June 2027, compared with a June 2026 spot rate of about N1,229/$ in the scenario analysis.
The research also showed alternative paths for the currency: a base case around N1,229/$, a trend-continuation scenario around N1,027/$, and the MDU convergence scenario of N933/$.
MDU Capital said the convergence scenario assumes that the prevailing 12-month forward trend leaves the spot-model gap little changed. It described the projection as a “scenario-based house view; not a guaranteed forecast or investment recommendation.”
For the naira, the implication is clear: analysts see room for meaningful appreciation if pricing efficiency returns and fundamentals drive the exchange rate. That would bring relief to businesses and consumers who have battled a weaker currency since 2024.