Naira Still Undervalued by 11%
Using the purchasing power parity (PPP) model to estimate the fair value of the naira, the Nigerian currency remains undervalued by about 11 percent.
This was the submission of Bismarck Rewane, managing director of Financial Derivatives Company, at the 2026 Economic Outlook of the Association of Corporate Treasurers of Nigeria (ACTN), where he delivered the keynote address.
Rewane, who anchored the session, put the appropriate exchange rate at around N1,256.79 to the dollar. He noted that currencies typically move towards their PPP-implied value over a five-year horizon. During his presentation, he provided a detailed and wide-ranging breakdown of the structural and cyclical factors that influence exchange rate movements in Nigeria.
At the start of his session, Rewane emphasised that the primary responsibility of a corporate treasurer is the optimisation of a company’s liquid resources. He noted that, in carrying out this responsibility, treasurers must operate with cautious optimism, particularly regarding foreign-currency exposure and FX-related activities.
The event also featured a panel session that included Adeyinka Ogunnubi, group treasurer of CFAO Nigeria, and Titilola Osinowo, group head of treasury and investments at Ardova Plc. Osinowo outlined several practical measures treasurers can adopt to optimise liquidity management. She highlighted FX swaps and FX options as instruments that treasurers should increasingly begin to explore, adding that greater attention should be paid to the structured use of hedging tools.
“If you have dollar receivables, you match your expenses with those dollar receivables, or you align your cash flows accordingly,” she said, emphasising the importance of natural hedging.
On the subject of what he described as “smart allocations,” Ogunnubi, who also serves as the national president of the ACTN, noted that “treasury, at its core, is about maximizing every unit of cash, getting the best possible return at the lowest possible cost and risk.”
He added that the first consideration for treasurers should always be working capital and how best to deploy it. Ogunnubi explained that there are scenarios where a company transitions from a net negative cash position to a net positive one. “Then the question becomes: what do you do?” he said. “Do you pay suppliers early? You may not be able to pay dividends ahead of time, but fundamentally, it comes down to identifying the most efficient and optimal use of cash at any given point.”
