Bismarck Rewane Forecasts Naira Depreciation After CBN Rate Cut

Bismarck Rewane, Managing Director of Financial Derivatives Company, stated that the naira may depreciate following the Central Bank of Nigeria's (CBN) decision to lower the Monetary Policy Rate (MPR) by 350 basis points to 23%. He estimated the naira could trade at about N1,150/$, emphasizing that this figure is a fair-value estimate rather than a precise prediction.

On September 22, the naira was valued at N1,327.78/$ at the official market, a slight decrease from N1,329.80/$ on September 21. In the parallel market, the naira strengthened to N1,380/$ from N1,385/$.

Rewane indicated that the lower interest rate could diminish returns on naira assets, potentially putting pressure on the currency. He also mentioned that the real rate of return had fallen from 11.1% to 7.61%, although it remains appealing for carry trades.

The CBN's foreign reserves increased to approximately $55 billion, providing some capacity to manage potential outflows.