The steady appreciation of the naira was as a result of about $8 billion the federal government spent to keep it up to its current levels, Bismarck Rewane, the MD/CEO of Lagos-based Financial Derivatives Company has revealed.
Rewane made this known during a presentation on Channels Television which comes against the backdrop of the monetary policy committee meeting.
The economist warned that the quick appreciation of the naira is “temporary” and should be treated with caution, advising Nigerian policymakers not to be “carried away”.
“We’re seeing that the naira is strengthening but with caution. Let’s not be too hasty because it’s going to correct itself,” Rewane said.
“There are many things that are happening: reserves of over $40 billion are coming down. We’ve also borrowed $4 billion in bond issues. When you look at all of that, we’ve almost spent $8 billion to support the naira at the current levels,” he revealed.
But the naira maintained stability across foreign exchange (FX) markets despite steady decline in external reserves.
Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated to N1,502.50 per dollar week-on-week, gaining 0.56 percent or N8.50 compared to N1,511/$ closed the previous week at the Nigerian Foreign Exchange Market (NFEM).
Authorised currency dealers quoted the dollar at the highest rate of N1,509 on Friday, stronger than N1,520 last week Friday.
The market recorded the lowest rate of N1,491 per dollar on Friday as against N1,500 last week at NFEM.