Nigeria’s naira is the most overvalued currency in Africa according to a new report from Renaissance Capital Africa (Rencap).
According to RENCAP the Naira is overvalued by as much as 30% based on real effective exchange rate model (REER).
The analysis is coming at a time where the exchange rate is at one of its strongest levels in over a year and external reserves hitting $41 billion.
The report opines that Nigeria has been experiencing food price deflation throughout 2025, suggesting the current headline inflation rate of 20% is over stating the inflation rate.
While the National Bureau of Statistics (NBS) reported inflation above 20% in August, the Rencap report projects that inflation is closer to 12% in October, 10% by December, and on track for 6% in 2026.
This distortion, it argues, has caused official CPI to diverge from actual price trends.
Important to note that most of its assumptions are at best technical and may not the reality of a lot of Nigerians in terms of prices.
This mix of tight monetary policy, a stable exchange rate, and a current account surplus has created an artificial stability around the naira, Rencap opines.
This could trigger a 30% depreciation in the currency by 2026–2027.
The report is also coming at a time when global investors are recalibrating their positions in African markets.
With oil prices stuck in the $60–70 per barrel range and the dollar expected to weaken, the investment house notes that local debt in both Nigeria and Ghana has become increasingly attractive.
However, the underlying dynamics driving both countries are markedly different.
With President Bola Tinubu seeking re-election in 2027, Rencap expects the CBN may delay aggressive rate cuts until after the elections, prolonging the naira’s artificial strength.