The naira’s recent appreciation is largely driven by the $8 billion the federal government has injected to stabilize the currency, according to Bismarck Rewane, CEO of Financial Derivatives Company.
Speaking on Channels Television, Rewane cautioned that this surge is temporary and urged policymakers not to get complacent.
“We’re seeing the naira strengthening, but let’s not be hasty. It will correct itself,” he warned. He pointed out that Nigeria’s foreign reserves are depleting, having fallen from $40 billion, while $4 billion has been raised through bond issues.
Despite this, the naira remained stable across various forex markets. CBN data shows that the naira appreciated by 0.56% week-on-week, closing at ₦1,502.50/$ compared to ₦1,511/$ the previous week.
Naira Gains in Both Official and Black Markets
- Official Market (NFEM):
- Highest rate: ₦1,509/$ (Friday)
- Lowest rate: ₦1,491/$ (Friday)
- Parallel Market (Black Market):
- Naira strengthened by ₦45, a 2% gain, as the dollar traded at ₦1,510/$ (Thursday and Friday), compared to ₦1,555/$ last week.
Naira Up 9% in 2025, But Challenges Remain
While the 9% gain in 2025 signals some stability, Rewane noted that economic challenges persist. Inflationary pressures are easing, GDP growth is positive, and fuel prices are cooling. However, high interest rates, rising borrowing costs, and increased PoS/ATM charges remain concerns.
On inflation, he dismissed the recent rebased figure of 24.48% for January 2025, arguing that real inflation is around 33.35%. “The man on the street doesn’t believe inflation has come down,” he said.
MPC Meeting to Shape Interest Rate Decisions
As the Monetary Policy Committee (MPC) prepares to meet on May 19-20, 2025, its decision on whether to cut, hold, or hike the current 27.5% interest rate will depend on upcoming inflation data.
For now, the naira’s rally is holding strong, but whether it is sustainable remains the key question.