The President Bola Tinubu administration has spent approximately $8 billion to stabilise the naira since it came on board.
This is according to the Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane.
Rewane who is also on the Board of the Nigerian Economic Summit Group Rewane, made the assertion in an interview with Channels Television on Friday.
According to him, substantial intervention from the federal government helped in stabilising the exchange rate market.
Explaining the reason the naira has “appreciated” to N1,505 and N1,507 across parallel and official foreign exchange markets, he noted that the apex bank has several initiatives to support the currency.
“We’ve also borrowed $4 billion in bond issues. When you take a look at that, you’ll see there is a lot of work. We’ve actually spent almost $8 billion trying to support the naira at current levels,” he said.
Rewane urged Nigerians not to get carried away by the recent decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) which retained interest rate at 27.50% on Thursday.
According to him, the government had spent billions defending the currency and raised additional funds through debt instruments.
The claim by Rewane comes amidst the celebrated stability in the foreign exchange market with a dollar exchanging for N1,500 as against the volatility experienced in the recent past.
Shortly after taking over power, the administration of President Bola Tinubu floated the naira by adopting a willing buyer-willing seller approach after years of multiple exchange rates.
This took effect in June 2023, resulting in the depreciation of the currency, with those defending the government saying it was a necessary decision to save the economy from total collapse.
“All segments are now collapsed into the Investors and Exporters window,” the CBN said in a statement, causing the depreciation of the naira from about N460 to over N650 in the first week of the new policy.
The depreciation of the naira continued afterwards reaching over N1, 200 to a dollar in November 2023.
As of January 2024, the naira exchanged for N1, 365 to a dollar at the parallel market, and N878 at the official market.
In February 2024, the exchange rate almost hit N1, 900 to one dollar amidst the clamp down on bureau de change operators and forex speculators in the country.
However, in recent times, there has been relative stability in the exchange market with the gap in parallel and official exchange market virtually closing.
Rewane emphasised that the stability in the naira comes at a cost and called for caution.
He described the recent inflation rebasing as a cosmetic approach which does not reflect on the average Nigerian.
“There’s no way that inflation can reduce by 10% in a short period. The man on the street does not believe that inflation has come down as sharply as that,” he said.
On the forex market, he said, “Primarily, what we did say and I did say here was that the naira would appreciate by the end of the first quarter in 2025 and everybody thought I was being too pessimistic but really, in reality we got to 1,550 precisely.
“We also said that the budget would be passed and it was passed. We also said there would be lowering of interest rates at a particular point in time, that did not happen but most of our projections especially said there would be another bond issue of $2bn, there was a bond issue of $2bn.
“Today after the Central Bank maintained status quo resolutely, the parallel market appreciated to N1,505 to a dollar, by 1.6 per cent but the PPP value of naira which is very technical is still at N1,102.”
