Nigeria has entered a new era of economic measurement with the creation of its first Real Effective Exchange Rate (REER) index based on the methodology of the Bank for International Settlements (BIS).
The study, led by financial risk management expert Titus Obiezue, marks a breakthrough in exchange rate analysis, offering policymakers and investors a transparent and globally comparable benchmark for assessing the nation’s currency competitiveness.
Until now, Africa’s largest economy was absent from the BIS’s published REER dataset, leaving policymakers and analysts without a globally comparable benchmark for measuring Nigeria’s external competitiveness. This new index addresses that gap by tailoring the BIS framework to the country’s economic realities.
The study recalibrated trade weights, expanded the currency basket to capture Nigeria’s true trading partners, and introduced adjustments for the parallel market, which has long shaped currency dynamics in the country. The result is a REER measure that is both internationally consistent and uniquely reflective of Nigeria’s structure.
Economists and policymakers say the new benchmark has wide-reaching implications. It strengthens Nigeria’s ability to detect exchange rate misalignments, manage capital flow risks, and evaluate external vulnerabilities.
For the Central Bank of Nigeria, the Ministry of Finance, and international institutions such as the IMF and World Bank, the index provides a transparent and reliable tool for economic assessment.
Beyond academic and policy domains, the innovation carries significant weight for financial risk management. With a credible REER index, Nigeria can better anticipate balance of payments pressures, reduce systemic risks from external shocks, and manage currency mismatches in corporate balance sheets.
For banks, multinationals, and institutional investors, the measure enhances risk modeling and portfolio strategies, while boosting investor confidence in a volatile environment.
Experts believe the framework could also serve as a model for other frontier markets excluded from BIS datasets, allowing them to build their own global-standard REER measures.
Describing the work as a “game changer,” observers note that it not only positions Nigeria more firmly within the global economic conversation but also cements Obiezue’s place among the world’s leading financial risk managers.
