The Federal Government has spent approximately $8 billion in an attempt to stabilize the naira amid ongoing economic pressures.
This was made known by CEO of Financial Derivatives Company, Bismarck Rewane on Friday.
Speaking on Channels Television’s News at 10 on Friday, Rewane highlighted the substantial interventions made to manage exchange rate volatility and inflation concerns.
He was speaking against the backdrop of the recent Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) which retained MPR at 27.50% on Thursday.
According to him, the government has not only spent billions defending the currency but has also raised additional funds through debt instruments.
“We’ve also borrowed $4 billion in bond issues. When you take a look at that, you’ll see there is a lot of work. We’ve actually spent almost $8 billion trying to support the naira at current levels,” Rewane stated.
Inflation Rebased, but What Does It Mean?
Rewane also discussed the recent rebasing of Nigeria’s inflation data, which has led to conflicting interpretations of the country’s economic realities. He outlined three different methods of measuring inflation, each presenting varying figures:
- Old Method: Inflation stands at 34.8%
- New Method (Rebased Data): Inflation drops to 24.4%
- Market Survey (Real Inflation): Inflation is closer to 33%
Expressing skepticism about the sharp decline reported in the new inflation metric, he noted that the figures might not reflect the reality of everyday Nigerians.
“There’s no way that inflation can reduce by 10% in a short period. The man on the street does not believe that inflation has come down as sharply as that,” he said.
What This Means for Nigerians
The ongoing pressure on the naira, coupled with inflation uncertainties, raises concerns about the effectiveness of government policies in stabilizing the economy. While official figures suggest inflation is moderating, market realities indicate otherwise, leaving consumers to grapple with rising costs of living.
Recall that on the CBN Governor Olayemi Cardoso had, in announcing the MPC decision said, “At this meeting, the Monetary Policy Committee noted with satisfaction, recent macroeconomic developments which are expected to positively impact the price dynamics in the near to medium term. These include the stability in the foreign exchange market with the resultant appreciation of the exchange rate and the moderation in the price of PMS,” Cardoso stated.
He also noted, “Members, however, were not oblivious of the persisting inflationary pressures, driven largely by food prices. The Committee noted the recent rebasing of the commodity price index (CPI) by the National Bureau of Statistics (NBS), which reviewed the weights of items to reflect current consumption.”
More insights
The naira has continued to maintain its value since January, posting some gains against the greenback as it now trades in the range N1,500/$.
Nairametrics data shows that the Naira appreciated by 1.32% on Friday 21 February 2024.
Meanwhile, the Cardoso-led CBN repeatedly said the goal is to maintain exchange rate stability while upholding a transparent, willing buyer, willing seller market system.
