Rewane backs CBN‘s $8bn intervention for naira 

Renowned economist and CEO of Financial Derivatives Company, Bismarck Rewane, has expressed strong support for the Central Bank of Nigeria’s (CBN) decision to deploy $8 billion to stabilize the naira.

He described the move as a crucial intervention to correct the currency’s undervaluation and ensure stability in the foreign exchange market.

Rewane shared his insights during a recent interview, where he analyzed the economic rationale behind the CBN’s actions and their impact on Nigeria’s forex market stability.

According to him, the move has already shown positive effects, with the gap between the parallel and official exchange rates narrowing to less than 1 per cent, compared to previous discrepancies of 10–20 per cent.

He also highlighted Nigeria’s improved balance of trade, now standing at $18.6 billion—it’s highest in a long time—which he credited as evidence of CBN’s policies yielding results.

“Margaret Thatcher used $27 billion to defend the British pound in the 1990s. China spent $1.2 trillion between 2015 and 2016. Russia used $80.5 billion between 2014 and 2015. Switzerland deployed $480 billion,” he stated.

He argued that Nigeria’s $8 billion intervention is relatively small in comparison, reinforcing its necessity.

Rewane further explained that, based on a Purchasing Power Parity (PPP) analysis, the fair value of the naira stands at N1,102.15 per dollar, indicating that the currency is currently undervalued by 26.35 per cent.

“But if you intervene to support an undervalued currency, you’re bringing it back from misalignment to alignment. That’s exactly what the Central Bank of Nigeria (CBN) is doing, and we applaud them for it,” he added.

The FDC boss noted that CBN’s past interventions have played a significant role in forex market adjustments.

“At this time last year, the Central Bank of Nigeria intervened for the first time with a 400 basis point increase in interest rates—something that had not been done in a long time. The currency was already at N1,900 per dollar at this time last year. It then appreciated rapidly to N1,200 per dollar,” he explained.