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Rewane Says Naira Appreciation Is Sustainable

The naira is appreciating against the dollar after months of a downward slide that triggered a hike in cost of living.


A photo combination of the old naira notes, Bismarck Rewane, and new naira notes

 

The Managing Director/Chief Executive Officer of Financial Derivatives Company Limited Bismark Rewane believes better days are ahead for the country’s currency, the naira. 

On Wednesday, the naira closed trading at 1,410/dollar at the parallel market and N1,475 at the official Nigerian Autonomous Foreign Exchange Market, according to data compiled from the FMDQ Securities Exchange.

Although the country’s currency had fallen sharply against major currencies in recent months, Rewane, who was a guest on Channels Television’s Politics Today which aired on Thursday, said the appreciation of the naira is sustainable.

“The truth is that it is sustainable as long as you do a number of things,” he said when asked by the presenter, Seun Okinbaloye, if the recent appreciation of the local currency is sustainable.

“One is that interest rate has been increased therefore the propensity to save has increased and the propensity to consume has actually reduced. People are consuming less and saving more if they are saving.”

But he is unhappy with the government’s management of resources.

“The government itself is consuming less and saving more. You heard that there is a ban on travel,” the economist added.

“At the same time, there is a lot of waste in government, there is a lot of leakages in government and mismanagement of things.”

READ ALSO: Dump Your Dollars, Naira Will Appreciate Soon, Presidency Tells Forex Speculators

Trust Deficit

According to him, the current administration should roll up measures to make mint more money in circulation.

While noting that there is a trust deficit, Rewane said there should be consistency in the government’s policy to build confidence in the citizens.

He said, “There is a need for new money, new money is a function of confidence. Confidence is a function of consistency in policy. These are the things that the administration has to come to terms with.

“We have a trust deficit in this country as policymakers. When we say today, the next day we change. There is no consistency. The truth is that when people begin to see consistency, they stop panicking.

“When they stop panicking, they buy less in quantity but over a longer period. So you will now begin to see the prices of those commodities, even like diesel which is now down to like N1,450.”