Renowned financial analyst and Managing Director of Financial Derivatives Company, Bismarck Rewane, has expressed strong confidence in the Central Bank of Nigeria’s (CBN) foreign exchange policies, stating that they are proving effective and pushing the naira toward its fair value. Speaking on Arise TV’s Global Business Report on Monday, Rewane highlighted key indicators that show the policies are stabilizing the currency and restoring market confidence.
In recent weeks, the naira has been gaining strength across both the official and parallel markets. As of Monday, it closed at ₦1,503.63/$ at the Nigerian Foreign Exchange Market Window and ₦1,500/$ at the parallel market, reflecting a narrowing gap between the two exchange rates.
Rewane pointed out that this convergence is a major sign that the CBN’s strategy is yielding positive results.
Citing a Purchasing Power Parity (PPP) analysis, he explained that the naira’s fair value stands at ₦1,102.15/$, meaning it is currently undervalued by 26.35%. He noted that while protecting an overvalued currency could lead to market distortions, supporting an undervalued currency helps correct economic misalignments. According to him, the CBN’s interventions are ensuring that the naira returns to its appropriate level, making the market more efficient and predictable.
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Rewane emphasized that the most important factor is whether these policies are benefiting the country, and in his assessment, they are. He pointed out that the difference between the official and parallel market exchange rates has now dropped to below 1%, a significant improvement from the previous disparities that ranged between 10% and 20%. This, he said, indicates a more stable forex market where price discovery is no longer driven by shadowy entities like Aboki FX.
Furthermore, he revealed that Nigeria’s balance of trade has surged to $18.6 billion, marking its highest level in a long time. The increased trade surplus, he explained, means that Nigerians are importing less and exporting more, largely due to forex policies that discourage excessive imports while promoting local production and exports. With these measures in place, he believes the market now recognizes the profitability of import substitution. He added.
