Rewane, Financial Expert Claims Naira Over-valued by 200%
Bismarck Rewane, managing director of Financial Derivatives Company Limited (FDC), said on Tuesday the Naira was over-valued by 200 percent.
Rewane, known as the Nigerian economist who breaks everything down, stated this in a programme on Arise TV, saying the black market where Naira exchanged for N680/$ on Tuesday provided a true picture of the value of the Nigerian currency.
FSDH Research had in its macroeconomic report stressed that the Naira-dollar exchange rate at the official market did not reflect the current realities in the country.
Rewane, therefore, mooted the devaluation of the Investors and Exporters (I&E) foreign exchange window rate next month to help the Naira find its true value.
Rewane is a valid authority on related matters with over 40 years of experience in the financial services sector.
Recall, in recent weeks, the Naira has depreciated against the dollar across the Nigerian foreign exchange market, as it fell to N431 per dollar, its lowest since the introduction of the I&E forex window. It weakened to a record low N710 per dollar at the black-market last month.
Rewane said: “Most currencies are undervalued but Nigerian naira [is] overvalued by 200 percent.
“The naira will likely depreciate again towards the N695/$-N700/$ range at the parallel market. The CBN will allow for a partial crawling peg in the forex market, and bring the I&E rate down to N440/$ in September.”
He disclosed that at least 48 countries in the world, including nine in Africa, operate floating or flexible exchange rate regimes.
Commenting on Naira’s struggles, he maintained that demand pressure and limited foreign currency inflows triggered the depreciation of the country’s currency.
According to the expert “Forex market in Nigeria is a price discriminatory monopoly. The barriers between the markets are thin and permissible. Multiple exchange rates create room for arbitrage and encourage rent-seeking behaviour.”
The FDC boss harped on the need for the CBN to increase dollar inflows into the country to address the crisis.
