Naira’s best performance in April ‘a charade’, says Rewane

Bismarck Rewane, an economic expert and managing director of Financial Derivatives Company Limited, has said the rally in the naira against the dollar and other major currencies was “only a charade”.

Rewane, in his presentation at this month’s edition of the LBS Breakfast Meeting seen by Markets Reporters, also said a recent move by the central bank could lead to naira appreciation this month.

“The recent appreciation in the currency market does not reflect market fundamentals. Naira’s best performance in April 2024 was only a charade, reflecting substantial overvaluation,” he said. “The naira is currently undervalued by 37.91%.”

Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), had said in April that the month saw the naira emerge as “the best-performing currency globally, supported by bullish sentiment from leading international investment institutions”.

He said the foreign exchange market was experiencing robust activities with turnover reaching levels not seen in over seven years.

“This liquidity boost instills confidence among investors, businesses, and other partners, ensuring fluidity in their interactions with Nigeria’s FX markets,” Cardoso said in a briefing on the sidelines of the World Bank/IMF Spring Meetings in Washington DC, United States.

The country’s forex market is about to witness a turnaround as the CBN continues its efforts to bring stability, according to Rewane.

He pointed out that the central bank recently permitted international oil companies to sell 50% of repatriated export proceeds directly to authorised forex dealers and eligible users of foreign exchange.

“This move is aimed at increasing forex availability in the market, thereby aiding in exchange rate stabilisation. The naira is likely to appreciate to N1,350-N1,450/$ through June. However, due to the lags, the impact is likely to be more pronounced towards the end of the year,” he said.