Mixed reactions have trailed the assertion by foremost economist Bismark Rewane’s assertion of naira stability and that the economy is bouncing back amidst intervention by the Central Bank of Nigeria (CBN) to keep the exchange rate at N1,500 to N1,560 in recent weeks.
The CBN had intervened in the market to the tune of $4.1 billion in the first half of 2025, according to CSL Stockbrokers in its half year economic outlook report.
This was done through direct sales of dollars to eligible individuals and corporates in a bid to check arbitrage, scarcity and keep the rate low.
As of the close of business on Friday the exchange rate closed at N1,533 to a dollar according to the Nigeria Foreign Exchange Market (NFEM).
The CBN sustained its intervention on Friday by selling $80m to eligible buyers during the week thereby keeping the rate between N1,520 and N1,533/$ during the week.
$4.1bn buffer
There have been mixed reactions over alleged defence of the naira by the CBN.
Daily Trust reports that this defence came in form of intervention with the CBN selling directly to the market as a participant.
This is the role the CBN has played in the last one year to stabilise the naira. Following the floating of the naira, the exchange rate ballooned above N2000 but the worst seems to be over following aggressive defence by the apex bank through active participation in the market.
A report indicated that between January and June, the CBN sold over $4bn to eligible buyers.
Rewane’s assertion
Speaking last week during a TV interview, Rewane asserted that the naira, with the current rate, has stabilised. He believes the worst is over and the economy is beginning to witness a rebound.
He said, “The currency is strengthened because of the discipline in the monetary policy framework and explicit inflation targeting and having a transparent foreign exchange market.
“If we didn’t have that by now, Nigeria’s inflation data would be frightening to those of us domestically and internationally. But right now everybody seems to align that the Nigerian economy is leaping its way out of crisis,” he stated.
Rewane equally projected that the Monetary Policy Committee (MPC) of the CBN may cut the interest rate by 25 basis points as the meeting begins today (Monday).
The MPC chaired by the CBN Governor Olayemi Cardoso reviews the macroeconomic conditions and determines appropriate monetary policy especially the Monetary Policy Rate (MPR) which is the interest rates the deposit money banks (DMBs) or lenders would apply in giving out loans.
Expectations are high as the MPC meets this week, coming a week after the National Bureau of Statistics (NBS) released the Headline inflation report indicate the rate eased to 22.22 percent when compared to the May 2025 headline inflation rate of 22.97 percent; a marginal decrease of 0.76 percent.
The report however stated that the Consumer Price Index (CPI) rose to 123.4 in June 2025, reflecting a 2.0-point increase from the preceding month (121.4).
On a year-on-year basis, the inflation rate was 11.97 percent lower than the rate recorded in June 2024 (34.19 percent).
On a year-on-year basis, the inflation rate was 11.97 percent lower than the rate recorded in June 2024 (34.19 percent).
“This shows that the Headline inflation rate (year-on-year basis) decreased in June 2025 compared to the same month in the preceding year (i.e., June 2024), though with a different base year, November 2009 = 100.”
It added that on a month-on-month basis, the Headline inflation rate in June 2025 was 1.68 percent, which was 0.15 percent higher than the rate recorded in May 2025 (1.53 percent).
“This means that in June 2025, the rate of increase in the average price level was higher than the rate of increase in the average price level in May 2025.
It said Food inflation rate in June 2025 was 21.97 percent on a year-on-year basis.
“This was 18.90 percent lower compared to the rate recorded in June 2024 (40.87 percent). The significant decline in the annual food inflation figure is technically due to the change in the base year. On a month-on-month basis, the Food inflation rate in June 2025 was 3.25 percent, up by 1.07 percent compared to May 2025 (2.19 percent). The increase can be attributed to the rate of increase in the average prices of Green Peas (Dried), Pepper (Fresh), Shrimps (white dried), Crayfish, Meat (Fresh), Tomatoes (Fresh), Plantain Flour, Ground Pepper, etc.”
What Rewane said
The foremost economist said, “I think there will be a cut of 25 basis points. Why do I say that? It is because global inflation has increased and Nigeria’s inflation is declining. Depending on what methodology is used, even if the old methodology is used,” he stated.
The MPC rates currently stand at 27.5 per cent which has been maintained since the beginning of the year.
With inflation easing for two consecutive times, analysts say the MPC may tinker with the current borrowing rates by applying a marginal cut or adopting a hold.
This, economists say, would be largely dependent on the macroeconomic performance especially the naira stability against the dollar and other foreign currencies.
‘Naira stable but fragile’
Ayokunle Olubunmi, a financial and economic analyst, said while he agrees with the assertion that naira is stabilising, the stability is fragile.
Olubunmi who is the Head Financial Institutions Ratings, Augusto and Co, on the purported stability of the naira said, “I will say yes and I will also say no because if you look at the macro data and everything, it is thus stable but that stability is still fragile.
“One of the major things the CBN used to support the naira is the FPI (Foreign Portfolio Investment) and these portfolio investors can leave at any point in time. If we see a significant outflow by these investors, it will affect the rate.
“It is the same thing with the oil prices. Although in the past couple of weeks, we have seen some improvements but when Trump started his Trade War, you saw what happened with the crude oil prices, it almost got to $50 or so. Assuming that continued for like a week, Nigeria would have been hurt.
“So the naira is stable for now but it is relatively fragile. Things can still go bad. It is good no doubt, we should not downplay what the CBN has done because what they have done is about hard-work, nobody expected it but they have done it. However, we need to be careful. It is still fragile. If there is any small imbalance, the naira would be affected.”
‘MPC may hold rates’
On the MPC meeting starting this week, the analyst said, “I am leaning more towards a hold. Like I mentioned to you, macro data are still very fragile. It is not too great. Even with the inflation numbers, the decline is not something that is that significant.
“So even if the CBN brings down the rates, it is not going to be significant, maybe less than 50 basis points but I am leaning more towards a hold.”
Naira, economy not totally stabilised – Economist
Emeritus Professor of Economics, Ndubisi Nwokoma is of the opinion that production fundamentals are not indicative of stability.
“There is no stability in production because for the economy to be stable you must have stability in the three key sectors of agriculture, manufacturing and services.
“So when we are talking about macroeconomic indicators, all these financial indicators, they are supposed to be a replica of what happens in the entire economy. But if they are being driven by fragile production statistics, then they cannot be totally stable.”
According to him, the monetary authorities have intervened frequently in the forex market.
“If the CBN reduces the level of intervention, the exchange rate would go haywire. It is all this intervention that has been on. Whenever the exchange rate goes out of proportion, they would always intervene.
“What we have is a managed rate because of the frequent intervention by the Central Bank in the market. How much is coming in from export proceeds which should be for production apart from oil?
“Stability is not sustainable. Let us just hope that the government can focus on production and we will have money coming in from export proceeds, the economy will now be serving the outside world and earning foreign exchange, that would be a major stable source of foreign exchange,” he added.
Options before MPC
On his part, Senior partner at SPM Professionals, Dr. Paul Alaje stated that with inflation slowing and Naira showing signs of stability, the Monetary Policy Committee of the Central Bank of Nigeria are left with two options
He said, “With the current trend with inflation and Naira, the MPC is left with two options. First is to leave all rates to remain static or take a big risk of reducing MPR. However, reducing MPR may lead to inflationary surge or maybe a marginal increase in inflation.
“Whether they will take the first option or the second option, it totally depends on them,” he said.
He also pointed out that Naira has seen some level of stability while hoping for continuity of the trend.
MPC should hold rates – Prof Ife
Also speaking on the issue, the Chief Economic Strategist at the Economic Community of West African States (ECOWAS), Prof. Ken Ife stated that the slowing of inflation and stability in the exchange rates signals positives for the country.
He however warned that global headwinds which Nigeria could be susceptible to have not abated, adding that the best case scenario for the Monetary Policy Committee of the CBN is to hold rates.
He said, “The slowing of Inflation and Foreign exchange stability are encouraging signs but the global headwinds have not abated and Oil prices powering below budget benchmark with increased budget deficit and renewed borrowing spree.”
He added, “I wouldn’t expect anything more than ‘Hold’ since inflation risks are high.” (Daily trust)
