The federal government has reportedly spent approximately $8 billion to stabilize the exchange rate of the naira against the US dollar at its current level.
Bismarck Rewane, Managing Director/CEO of Lagos-based Financial Derivatives Company, disclosed this information, attributing the recent appreciation of the naira to the intervention of the Central Bank of Nigeria (CBN).
Speaking during a presentation on Channels Television, Rewane highlighted the issue against the backdrop of the monetary policy committee (MPC) meeting. However, he cautioned that the naira’s rapid appreciation is temporary and advised policymakers not to become overly optimistic.
“We are witnessing the naira strengthen, but we must proceed with caution. Let’s not rush, as the market will self-correct,” Rewane stated.
He explained that Nigeria’s foreign reserves, which once exceeded $40 billion, are declining, and the country has borrowed $4 billion through bond issuances. “When you consider all these factors, nearly $8 billion has been used to sustain the naira at its current level,” he added.
Despite a steady decline in external reserves, the naira has remained stable across foreign exchange (FX) markets.
According to data from the Central Bank of Nigeria (CBN), the naira appreciated to N1,502.50 per dollar week-on-week, marking a 0.56% gain (N8.50) from the previous week’s closing rate of N1,511 at the Nigerian Foreign Exchange Market (NFEM).
On Friday, authorized currency dealers quoted the highest dollar exchange rate at N1,509, stronger than the N1,520 recorded the previous Friday. The lowest rate recorded was N1,491 per dollar, improving from last week’s N1,500.
In the parallel market (black market), the naira strengthened by N45, gaining 2% as the dollar was exchanged at N1,510 on Thursday and Friday, down from N1,555 the previous Friday.
Rewane acknowledged the naira’s newfound stability but urged caution. He noted that the currency has appreciated by 9% in 2025, continuing its rally since December following CBN-led reforms aimed at improving market efficiency.
He pointed out that inflationary pressures are easing, presenting a positive outlook for Nigeria’s gross domestic product (GDP) growth.
“On the positive side, the naira has gained 9% in 2025, inflationary pressures are reducing, and GDP growth remains stable. Fuel prices are dropping, and the Purchasing Managers’ Index (PMI) is expanding,” he explained.
However, he also warned of challenges, including high money supply at 17%, elevated interest rates, increased borrowing costs, and rising fees for PoS, ATM transactions, telecom services, and electricity tariffs.
Regarding inflation, Rewane stressed that it was unrealistic to expect a price drop of over 10% in such a short period.
Although rebased figures put inflation at 24.48% for January 2025—down from 34.8% in December—Rewane’s team at FDC calculated the actual inflation rate to be around 33.35%.
“The average Nigerian does not believe that inflation has truly decreased,” he remarked.
During the 299th MPC meeting, CBN Governor Olayemi Cardoso acknowledged the difficulty in comparing the newly adjusted inflation figures with previous ones, noting that it would be like “comparing apples to oranges.”
“But we can see that inflation is gradually declining,” he added.
The MPC is scheduled to meet on May 19 and 20, 2025, by which time three more inflation reports will have been released. These will help determine whether to adjust the benchmark interest rate from its current 27.5% level.
Meanwhile, Ayo Teriba, CEO of Economic Associates, urged caution regarding the naira’s stability, arguing that it is not as significant as it appears.
He noted that while the naira strengthened to N1,300/$ in April last year, it has since averaged N1,500/$, making the current level less impressive.
“The exchange rate previously weakened to N1,900 before improving to N1,300 in April last year. Now it’s fluctuating between N1,650 and N1,500.
Compared to N1,300 last April, there’s little to celebrate,” Teriba stated in an interview with BusinessDay Television.
However, other economists and analysts have expressed optimism about the naira’s prospects, citing steady gains since the CBN introduced reforms last December to improve FX market transparency.
Teriba, however, cautioned against premature optimism, emphasizing that inflation remains high.
“For Nigeria, the issue is not just exchange rate fluctuations but also the soaring cost of living. Inflation remains at 24.48% even after the revised consumer price index,” he said.
Rather than praising the CBN, Teriba urged monetary authorities to take further action to restore meaningful stability.
“I don’t think an exchange rate of N1,500 per dollar is worth celebrating, given that it was below N500 per dollar in the past. The exchange rate significantly influences our dollar GDP value and per capita income,” he argued.
While acknowledging that the naira has improved, Teriba stressed the need for sustained efforts to push the exchange rate below N1,000 per dollar.
“The government should work aggressively to bring the exchange rate below N1,000 per dollar instead of congratulating itself over N1,500,” he concluded.
