RESTORING The PRIDE Of Naira, See What Tinubu Has Done To Stabilize Nigerian Currency Against The Dollar
The naira, Nigeria’ s national currency, represents the backbone of its economic sovereignty. Over the years, it has faced significant challenges, including external economic pressures, inconsistent policies, and structural inefficiencies. For most Nigerians, the naira’ s strength is synonymous with economic stability and national pride. However, its persistent struggles reflect broader economic issues, such as soaring inflation, exchange rate volatility, diminishing foreign reserves, and structural vulnerabilities within the economy.
At the 2025 budget presentation, the President revealed a proposed exchange rate of ₦1500/$, sparking debates on the true value of the naira. Over the past 18 months, the currency has devalued drastically, shifting from an average of ₦800/$ to ₦1900/$. This sharp depreciation has positioned the naira as one of the poorest- performing currencies among emerging markets. The pressing question remains: is the naira on an unrelenting freefall, or has it reached a turning point?
The debate about whether the naira is undervalued is both urgent and complex. Economic experts argue that the naira does not accurately reflect its intrinsic value. Metrics such as Purchasing Power Parity (PPP) and the Real Effective Exchange Rate (REER) suggest potential undervaluation. The PPP metric indicates that Nigeria’ s lower domestic prices compared to global standards create a perception of undervaluation. However, systemic economic weaknesses— such as heavy reliance on oil exports, high inflation, and inadequate forex reserves— create misalignment rather than a true undervaluation. The divergence between official and parallel market exchange rates further underscores the naira’ s misalignment with its economic fundamentals.
To address these challenges, policymakers have implemented reforms targeting monetary stability and market efficiency. Between June and October 2024, measures like adjusting monetary policies, enhancing forex market operations, and attracting inflows through remittances, bonds, and foreign investments helped reduce the gap between the naira’ s value and its fair market equilibrium. By October 2024, the naira was slightly overvalued by 1. 8%, reflecting marginal improvement in its alignment.
