Market News
FG spent almost $8bn to support naira’s stability – Rewane
The steady appreciation of the naira was as a result of about $8 billion the federal government spent to keep it up to its current levels, Bismarck Rewane, the MD/CEO of Lagos-based Financial Derivatives Company has revealed.
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 $8 billion to support the naira at the current levels,” he revealed.
Read also: Naira closes week stable amid declining external reserves
But the naira maintained stability across foreign exchange (FX) markets despite steady decline in external reserves.
Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated to N1,502.50 per dollar week-on-week, gaining 0.56 percent or N8.50 compared to N1,511/$ 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 percent as the dollar quoted at N1,510 on Thursday and Friday from N1,555 quoted last week Friday.
Naira appreciated 9% in 2025
Rewane noted that while the new found stability of the naira should be treated with caution, the local currency has strengthened by 9 percent 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 9 percent 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% 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.
Rebased inflation 24.48%, real estimate 33.35%
On inflation, Rewane emphasised that there was no way prices could have reduced by over 10 percent within such a short period.
While the rebased figures stood at 24.48 percent for January 2025 up from 34.8 percent last December, the real method carried out by the FDC team puts the inflation rate at 33.35 percent.
“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 percent.
