By : Gloria Nwafor

Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, has projected the headline inflation to average 16 per cent in the year.

Rewane stated this at the presentation of an economic outlook for 2026 by the Association of Corporate Treasurers of Nigeria (ACTN) over the weekend.

He noted that stability was not the destination but a tool that treasurers needed to protect value, manage risk and support growth.

Rewane urged treasurers to shift from defensive cash hoarding to strategic liquidity management with better timing of FX conversion. He advised them on improved use of hedging instruments and stronger alignment between treasury and business planning.

Speaking on the FX market and stability, inflation normalisation and the global economic environment, Rewane lamented that the naira has lost significant value in 10 years.

The naira fell from about N190/$ in 2015 to about N1430 this month.

Giving the fundamental drivers of the exchange rate, he said exports have improved over the past five years due to a slight improvement in total factor productivity.

Similarly, he said the trade balance is currently at six per cent of GDP, improved in 2024 and 2025 and expected to further improve this year.

According to him, repayment and debt service obligations are putting pressure on the FX.

Highlighting the technical drivers on the true value of the naira, Rewane stressed that the naira is theoretically undervalued in the official market by 11.52 per cent and fundamentals justify, benefiting exports but raising import costs and inflation risks.

Stating that the exchange rate is relatively stable, however, Rewane said it is not fully anchored, given an outlook of inflation hovering around N1, 579/$ in 2026 to N1,811/$ in 2028.

On the implications of naira stability on liquidity decisions, the economist listed improved cash flow predictability, enhanced yield on surplus liquidity, better alignment of the funding structure, improved cash flow forecasting, optimised FX conversion timing and stronger liquidity risk management.

The Financial Derivative boss said inflation is expected average about 16 per cent this year, given the new CPI methodology that led to a sharp drop due to the base-year correction effect.