The Federal Government has spent approximately $8 billion to stabilise the naira, the Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, has said.
Rewane also serves on the Board of the Nigerian Economic Summit Group among other entities.
His claim is coming 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.
Going by the prevailing exchange rate, it means the federal government had so far spent nearly N12 trillion to stabilise the Nigeria’s currency to be where it is today.
‘Over 4.5m Nigerians financially included through EFinA projects’
Foreign exchange market: A new era of transparency, accountability
There was no reaction yesterday from the Central Bank of Nigeria (CBN); while the Presidency faulted Rewane’s claims.
CBN’s Acting Head, Corporate Communications, Mrs Hakama Sidi Ali, could not be reached. She did not pick her calls and did not also respond to a text and WhatsApp messages before press time.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga, in a text message to Daily Trust last night, said the claims by Rewane were not true.
“It is not true. It is a ridiculous statement to make. The CBN will set the record straight,” Onanuga said.
Naira’s present status
Rewane, who spoke in an interview with Channels Television on Friday, said 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.
He said the government had spent billions defending the currency and raised additional funds through debt instruments.
Naira’s value under Tinubu
Daily Trust reports that shortly after taking over power, the administration of President Bola Tinubu had 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.
The CBN had, at that time, said it had ended the “segmentation” of forex markets, explaining that transactions would be carried out only through the “Investors and Exporters” category.
It said the naira will also be traded at a “willing buyer, willing seller” market rate instead of regulated rates against the US dollar and other currencies.
“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.
Daily Trust reports that Tinubu’s predecessor, Muhammadu Buhari had consistently refused to devalue the naira during his tenure, saying Nigeria’s economy, heavily reliant on imports and with limited exports beyond oil, could not withstand the repercussions of devaluation.
Buhari had at many fora expressed concern that devaluation would disproportionately affect the poor by escalating prices of goods and services.
And since the floating of the naira by the CBN, the naira lost a significant portion of its value against, driven by increased demand for dollars, inadequate forex supply, and speculative activities.
Inflation also spiked, reaching over 28% by early 2024, driven by higher import costs, rising fuel prices (due to subsidy removal), and food price hikes.
Food inflation in particular soared, worsening economic hardship for many Nigerians.
Many businesses continued to struggle to access forex due to CBN’s limited supply.
Rewane calls for caution
According to the renowned economist, the stability in the naira comes at a cost and called for caution even with the recent inflation rebasing which he described as a cosmetic approach which does not reflect on the average Nigerian.
On the rebasing of the inflation which reduced the rate maximally, he said the figures might not reflect the reality of everyday Nigerians.
“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.
Speaking 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 1550 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.
“Inter-banking interest rates remain flat and the Nigerian Stock Exchange as you can see here actually lost a little bit. Average daily turnover fell. But this is a major thing. You see the naira appreciating very quickly but we say that this is temporary, don’t get carried away. It will reverse itself to stay where there is fair value.
“So I think the important thing is that ever since then, some things have happened. There is the bright side and the dark side. On the bright side, the Nigerian naira has appreciated by 9% in 2025, inflationary pressures are easing and GDP growth is actually positive. Petrol and diesel prices are cooling and the PMI is actually expanding.
“Now on the dark side, money supply growth is at 17% which is relatively high. Interest rates are elevated, borrowing costs are up and ATM and POS fees are up and Telcos and electricity tariffs are up but that is a balanced picture.
“Externally, we are seeing that of course the naira is strengthening but with caution. Let’s not be too hasty, it is going to correct itself because there are many things that are happening. One, the reserves of $42bn came down to $38 point something billion. But we have also borrowed $4bn in bond issues. So when you take a look at that you find that we have actually spent almost $8bn trying to support the naira at current levels.”
‘No visible gains’
Speaking on some of the actions taken by the Tinubu administration, a public commentator, Dr Suleiman A. Suleiman, said “The underlying conditions of economic insecurity and precariousness for millions of Nigerians have only gotten worse under this government.
“Yes, inflation and food prices have reduced marginally over the past few weeks, and the economy as a whole is projected to grow by 3.5 per cent or higher in 2025. Yet, none of these changes much because the reductions are nowhere near pre-2023 levels.
“The pains of reform, which should be temporary, have not yet translated into enduring gains for a majority of Nigerians. President Tinubu has owned these policies as evidence of his “brave leadership”, of his willingness to take “tough” or “painful” but “necessary” decisions for a sustainable economic future for Nigeria. Yet, two years on—and presidential bombast aside—millions of Nigerians can’t see or feel the gains of reform.
“As things stand, both fuel subsidy removal and naira devaluation have scarcely yielded any benefits other than unprecedented suffering for tens of millions of Nigerians and trillions of cheap naira at the lavish and wasteful hands of the federal government and state governors. That can’t be the original intention.
“The whole point of naira devaluation and fuel subsidy removal was to enable the government to do more for Nigerians in areas like health, education, and infrastructure. Yet, the fundamental challenge of how to move from short-term pains to long-term gains remains unresolved,” he said.
(Daily Trust)
