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Bismarck Rewane, Managing Director of Financial Derivatives Company, has expressed confidence in CBN foreign exchange policies, stating they are yielding positive results.
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Rewane noted that the naira is currently 26.35% undervalued, with a fair value of 1,102.15/$ based on Purchasing Power Parity analysis.
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He commended the CBN’s interventions, saying they are bringing the naira back to its appropriate level.
Bismarck Rewane, Managing Director of Financial Derivatives Company, has expressed confidence in the Central Bank of Nigeria’s (CBN) foreign exchange policies, stating they are yielding positive results and aligning the naira closer to its fair value.
Rewane made this statement on the Global Business Report show on Arise TV on Monday.
According to Rewane, a Purchasing Power Parity analysis places the fair value of the naira at 1,102.15/$, meaning the currency is currently 26.35% undervalued.
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He noted that intervening to protect an overvalued currency can distort market forces, but supporting an undervalued currency helps correct misalignment.
“What is the fair value of the naira? When you do the PPP analysis of the naira, it comes out at 1,102.15/$, in other words, the naira is 26.35% undervalued. If you intervene to protect an overvalued currency, that is bad, but if you intervene to support an undervalued currency, you’re actually bringing the currency back from its misalignment to its alignment. So that is what the Central Bank of Nigeria is doing, and we applaud them,” Rewane said.
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He added that the CBN’s interventions are bringing the naira back to its appropriate level, citing the reduced difference between official and parallel market rates as evidence of the policies’ effectiveness.
“The big picture is, are these policies working, and are they for the good of the country? In our humble opinion, the policies are working,” Rewane stated.
CBN’s FX Reforms Stabilize Naira, Says Expert
The Executive Director of the Osun River Basin, Mr Ayobami Oyalowo, has commended the Central Bank of Nigeria’s (CBN) foreign exchange reforms.
According to Oyalowo, the CBN took specific measures to support the naira, which are yielding the desired results.