Bismarck Rewane Analyzes Naira's Future After CBN Rate Cut

Bismarck Rewane, the Chief Executive Officer of Financial Derivatives Company, stated that the naira could face renewed pressure after the Central Bank of Nigeria (CBN) reduced its benchmark interest rate to 23% on September 22, 2026. He projected that while the naira is likely to depreciate, the decline may not be as severe as some investors expect due to the currency's estimated fair value and Nigeria's positive real interest rate.

The recent rate cut has decreased Nigeria's real rate of return from approximately 11.1% to 7.61%, yet this return remains attractive compared to some advanced economies, potentially encouraging foreign investors in carry trades. However, Rewane cautioned that the reduction might deter foreign portfolio investment (FPI) as lower returns could make Nigerian assets less appealing.

He also expressed concerns about the impact on domestic savings, suggesting that reduced returns could lead Nigerians to seek alternative assets. He emphasized the need for stronger fiscal measures to ensure monetary easing supports sustainable economic growth.