The federal government has spent about $8 billion to stabilise the exchange rate of the Naira to the US dollar at its current levels.
Managing director/CEO of Lagos-based Financial Derivatives Company, Bismarck Rewane, who revealed this, attributed the steady appreciation of the naira was as to this intervention by the Central Bank Nigeria (CBN)
Rewane made this known during a presentation on Channels Television which comes against the backdrop of the monetary policy committee meeting.
The economist warned that the quick appreciation of the naira is “temporary” and should be treated with caution, advising Nigerian policymakers not to be “carried away”.
“We’re seeing that the naira is strengthening but with caution. Let’s not be too hasty because it’s going to correct itself,” Rewane said.
“There are many things that are happening: reserves of over $40 billion are coming down. We’ve also borrowed $4 billion in bond issues. When you look at all of that, we’ve almost spent $8 billion to support the naira at the current levels,” he revealed.
But the naira maintained stability across foreign exchange (FX) markets despite steady decline in external reserves.
Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated to N1,502.50 per dollar week-on-week, gaining 0.56 per cent or N8.50 compared to N1,511/$ closed the previous week at the Nigerian Foreign Exchange Market (NFEM).
Authorised currency dealers quoted the dollar at the highest rate of N1,509 on Friday, stronger than N1,520 last week Friday.
The market recorded the lowest rate of N1,491 per dollar on Friday as against N1,500 last week at NFEM.
At the parallel market, popularly called black market, the naira appreciated by N45, gaining 2.0 per cent as the dollar quoted at N1,510 on Thursday and Friday from N1,555 quoted last week Friday.
Rewane noted that while the new found stability of the naira should be treated with caution, the local currency has strengthened by nine per cent so far in 2025, maintaining its rally up from December after the CBN introduced some reforms to ensure efficiency in the market.
He highlighted that inflationary pressures are easing while signaling a bright side for the country’s gross domestic product (GDP) growth.
“On the bright side, the Nigerian naira has appreciated by nine per cent so far in 2025, inflation pressures are easing and GDP growth is positive. Petrol/diesel prices are cooling and the PMI is expanding,” he said.
“On the dark side, money supply is at 17 per cent which is very high, interest rates are elevated, borrowing costs are up, PoS and ATM fees are up and telecom and electricity tariffs are up,” Rewane stated.
On inflation, Rewane emphasised that there was no way prices could have reduced by over 10 per cent within such a short period.
While the rebased figures stood at 24.48 per cent for January 2025 up from 34.8 per cent last December, the real method carried out by the FDC team puts the inflation rate at 33.35 per cent.
“The man on the street does not believe that inflation has come down,” he declared.
Speaking at the 299th MPC meeting, Olayemi Cardoso, governor of the CBN said that admitting that inflation has fallen by over 10 percent after the rejigging of the consumer price index meant comparing “apple with oranges”.
“But we can see that inflation is gradually trending down”.
The MPC will be meeting on May 19 and 20 2025 after which three inflation data must have been released. This will then shape their policy direction whether to cut, hold or hike benchmark interest rates from its unchanged 27.5 per cent.
Recall that chief executive officer of Lagos-based research firm Economics Associates, Ayo Teriba, earlier said the new found stability of the naira is nothing to be overly excited about given that the local currency fell from as high as N1,300/$ last April.
Teriba said the naira at 1,300/$ in April could have been said to be “encouraging” compared to an average of N1,500/$ obtainable today.
“The exchange rate has weakened as far as N1,900 and it’s improved to a best record at the end of April last year when it was at N1,300. Now it’s gone to 1,650 and now going back to 1,500. But compared to 1,300 in April last year, there’s nothing to celebrate,” Teriba stated in an interview on BusinessDay Television.
But for many other economists and analysts, the naira’s outlook is bullish as the local currency has been steadily strengthening since the CBN embarked on some reforms last December to enhance transparency and efficiency of the FX market.
“Don’t be too quick to express optimism or commend efforts. Inflation is still at record levels. Let’s hope that the exchange rate weakens at a sustainable level to bring inflation down,” Teriba stressed.
For Africa’s most populous nation, the problem is not only about swings in exchange rates but also sky-high prices that’s now fallen to 24.48 per cent in January after the country revised its consumer price index.
Teriba said rather than commending the central bank, he would encourage the monetary authorities to do more “until we get to some more meaningful levels.”
“I don’t think 1,500 is something to celebrate given that we are coming from about less than N500 to the US dollar. What the exchange rate is goes a long way to determine where our dollar GDP value is and our per capita income.”
The economist said while the naira is showing some improvements, efforts must be made so that it’s sustained so the dollar crashes to N1,000.
“The government should be pushing more aggressively to see the exchange rate go back to below N1,000 to a USD and not congratulating ourselves for N1,500 per dollar,” Teriba stated.
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