Renowned economist and Chief Executive Officer of Financial Derivative Company Limited, Bismarck Rewane, has applauded the recent interventions by the Central Bank of Nigeria (CBN) in the foreign exchange market, saying the policies are effectively stabilising the naira.
Rewane stressed that CBN’s core mandate included maintaining external reserves to safeguard the naira’s value, a responsibility it was currently fulfilling.
He stated that the policies embarked upon by CBN had made the foreign exchange market more transparent, thereby bringing confidence into the market and reducing speculative activities.
Speaking on ARISE TV on Monday, Rewane said, “When the CBN or the federal government intervenes to stabilise or protect the value of the naira, that is exactly what they are supposed to do.
“Secondly, we must understand what happened in line with economic objectives. The fair value of the naira, based on purchasing power parity (PPP) analysis, is 1,002.15/$1. This means the naira is 26.35 per cent undervalued. If you intervene to protect an overvalued currency, that is bad, but if you intervene to support an undervalued currency, you are correcting a misalignment. That is what the CBN is doing, and we applaud them for it.”
Rewane highlighted the CBN’s role in unifying multiple exchange rates, which previously created a fragmented market.
He said, “There were five or six exchange rates before now. The market was segmented, with price discrimination, CBN selling at one rate while others sold back at a different rate. The CBN has now de-segmented the market, increasing transparency and price discovery. Policies on zero-placement levels and other measures have reduced speculative activities and arbitrage, leading to stability.”
Rewane underscored key economic data supporting the effectiveness of the CBN’s interventions, saying the spread between parallel and official exchange rates has narrowed from 15-20 per cent to less than one per cent.
He said market price discovery had improved, fostering investor confidence.
According to him, Nigeria’s balance of trade has reached $18.6 billion, its highest in years; and depreciation of the naira has encouraged export growth and made import substitution more viable.
Rewane stated, “Money supply growth has decreased from 85 per cent to 17 per cent, approaching the 15 per cent target. Oil price is falling, and now we have projects like the Dangote refinery begin to do so.
“We are now refining locally and becoming more independent, as a matter of fact, exporting some of our refined products to Western Central Africa exporting some of our cement to these countries, and Nigerian airlines are carrying people across the continent.
“So the policies are working. No question about that. Can we do more? Yes, we can do more, and definitely we’ll do more.”
Rewane cited the CBN’s decision to maintain a firm stance on interest rates as a sign of its commitment to economic stability.
He stated, “Looking at what happened last year: the CBN intervened with a 400-basis-point increase in interest rates, a move not seen in a long time. The naira appreciated. But markets often overreact. Now, they are taking a systematic approach.”
Rewane also tackled what he described as misinformation circulating about CBN’s intervention.
“Many are ignorant, but some are deliberate mercenaries, so-called influencers. Ignorance can be addressed with education, but deliberate misinformation is another matter,” he warned.
