Bismarck Rewane backs CBN’s efforts to defend the Naira, says currency is undervalued

Rewane made these remarks during an interview on Arise TV’s Global Business Report on Monday, where he analyzed the economic rationale behind the CBN’s actions and its impact on Nigeria’s forex market stability.

Rewane cited data showing that the gap between the parallel and official exchange rates has significantly narrowed to less than 1%, compared to past discrepancies of 10–20%. Additionally, Nigeria’s balance of trade now stands at $18.6 billion, its highest in a long time—an indication that CBN’s policies are yielding results.

“Margaret Thatcher used $27 billion to defend the British pound in the 1990s. China spent $1.2 trillion between 2015 and 2016. Russia used $80.5 billion between 2014 and 2015. Switzerland deployed $480 billion. 

“So, if I say that the Nigerian government is using $ 8 billion – which is peanut – to support its currency, an undervalued currency, not an overvalued currency, quite frankly, that’s a good thing. So, we need to support that kind of initiative. If they were supporting an overvalued currency, then of course not.”  

“When you now say that the Central Bank of Nigeria (CBN) or by extension the Federal Government of Nigeria is intervening to safeguard, to stabilize, to protect the value of the Naira—that is exactly what they are supposed to do,” Rewane stated.

He further explained that based on a Purchasing Power Parity (PPP) analysis, the fair value of the naira stands at N1,102.15 per dollar, meaning the currency is currently undervalued by 26.35%.

“If you intervene to protect an overvalued currency, that’s bad. That’s negative. But if you intervene to support an undervalued currency, you’re actually bringing the currency back from its misalignment to its alignment. So, that’s what the Central Bank of Nigeria (CBN) is doing. And we applaud them for doing that,” he added.

Rewane highlighted that CBN’s past interventions have played a key role in forex market adjustments.

“At this time last year, the Central Bank of Nigeria intervened for the first time with a 400 basis point increase in interest rates—something that had not been done in a long time. The currency was already at N1,900 per dollar at this time last year. It then appreciated rapidly to N1,200 per dollar,” he explained.

However, he pointed out a critical oversight in past interventions, stating, “One thing was missing: the Central Bank did not come up with a programme outlining the planned schedule of intervention.”

Rewane stressed that for investors, stability is more important than the actual value of the currency.

“What is important to investors is not the value of the currency but the stability of the currency. When you intervene to create stability, that is exactly the role of the Central Bank and the markets are responding positively,” he noted.

He also criticized misinformation in the public space, saying, “There are mercenaries on the internet who are saying things they don’t understand. The big picture is: Are these policies working? Are they for the good of the country? My humble opinion is that the policies are working.” 

Rewane urged Nigerians to support the initiative, adding that government intervention should be assessed based on its effectiveness rather than mere perception.