Naira will strengthen in January 2025- Bismarck Rewane

An economist, Bismarck Rewane, has projected that the naira will strengthen further in January 2025 compared to its current weak trading position.

Rewane added that the exchange rate is the major cause of inflation in Nigeria, noting that a partial recovery of the naira will not only help reduce inflation but will curb money supply saturation in the money market.

Rewane made this known during his monthly presentation at the Lagos Business School Executive Breakfast Session, which was themed ‘The Quadrangular Impact of the Trump Win on Nigeria’.

In the past week, the naira had recorded mixed performance across segments as foreign exchange reserves hit new highs.

The Central Bank of Nigeria’s foreign reserves reached its highest level in 32 months, as it advanced 68 basis points week-on-week to settle at $40bn.

At the Nigerian Autonomous Foreign Exchange Market, the naira weakened by 70bps against the American dollar to settle at N1,678.87/$.

In contrast, the naira strengthened at the parallel window by 30bps against the USD to exchange at N1,720/$.

Speaking during his presentation, Rewane, who is also the Managing Director of Financial Derivative Company, affirmed, “There is no economic justification for the naira to be trading at less than 30 per cent of its fair value in less than twelve months.”

He expressed a strong belief that the naira would recover some of its losses in January 2025 for four reasons.

“The differential between the parallel market and the official market rate has virtually disappeared. This was responsible for a minimum of 30 per cent of the value erosion due to speculative round-tripping; 

The supply of dollars into the market, which is a function of oil production and prices; The CBN should and we believe will announce a programme of dollar sales to the market similar to the T/Bill auction. This will help reduce market uncertainty; The forex market structure to be more transparent,” he said.