Rewane projects 16% average inflation in 2026

Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, has projected that Nigeria’s headline inflation will average about 16 per cent in 2026.

Rewane made the projection during the presentation of the 2026 economic outlook organised by the Association of Corporate Treasurers of Nigeria (ACTN) over the weekend.

He explained that stability should not be viewed as an end in itself, but as a tool treasurers must deploy to preserve value, manage risks and support business growth.

According to him, corporate treasurers should move away from defensive cash hoarding and adopt more strategic liquidity management, including better timing of foreign exchange (FX) conversions. He also advised improved use of hedging instruments and closer alignment between treasury operations and overall business planning.

Speaking on developments in the FX market, inflation normalisation and the global economic environment, Rewane lamented the sharp depreciation of the naira over the past decade. He noted that the currency had weakened from about N190 to the dollar in 2015 to roughly N1,430/$ as of this month.

On the fundamental drivers of the exchange rate, Rewane said exports had improved over the past five years, supported by modest gains in total factor productivity. He added that Nigeria’s trade balance currently stands at about six per cent of GDP, having improved in 2024 and 2025, with further gains expected in 2026.

However, he pointed out that rising debt repayment and servicing obligations continue to exert pressure on the foreign exchange market.

Highlighting technical indicators on the naira’s true value, Rewane said the currency is theoretically undervalued by about 11.52 per cent in the official market. While this supports exports, he warned that it also increases import costs and heightens inflationary risks.

Although the exchange rate has shown relative stability, Rewane stressed that it remains weakly anchored. He projected that inflation-adjusted exchange rates could range from N1,579/$ in 2026 to about N1,811/$ by 2028.

On the implications of naira stability for corporate liquidity decisions, he identified improved cash flow predictability, enhanced returns on surplus liquidity, better funding structure alignment, improved cash flow forecasting, optimised FX conversion timing and stronger liquidity risk management.

Rewane concluded that inflation is expected to average around 16 per cent in 2026, largely due to the new Consumer Price Index (CPI) methodology, which triggered a sharp statistical decline following the base-year adjustment.