The federal government has deployed a massive N12 trillion (approximately $8 billion) in market interventions to artificially prop up the naira, according to Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company.
The temporary strengthening of the naira to N1,500 against the dollar masks significant underlying economic pressures and unsustainable market manipulation, Rewane revealed in a Channels Television interview on Friday.
"We've actually spent almost $8 billion trying to support the naira at current levels," Rewane explained, highlighting how this short-term stabilization relies heavily on borrowed funds, including $4 billion in new bond issues, rather than organic economic growth.
Rewane, who serves on the Nigerian Economic Summit Group's Board, warned against celebration of the current exchange rates, pointing out that the naira's purchasing power parity (PPP) remains significantly weaker at N1,102 to the dollar. This gap between market rate and fundamental value suggests the current appreciation is unlikely to hold.
The intervention-driven stability comes amid concerning economic indicators: money supply growth remains elevated at 17%, interest rates are high, and foreign reserves have declined from $42 billion to approximately $38 billion – even as the country takes on more external debt to finance currency support operations.
Market analysts note that without addressing fundamental economic challenges, the current exchange rate levels cannot be maintained indefinitely, especially given the substantial cost to the nation's reserves and rising debt burden.
Rewane also challenged the credibility of recent inflation figures, suggesting they don't reflect economic realities faced by average Nigerians. "There's no way that inflation can reduce by 10% in a short period. The man on the street does not believe that inflation has come down as sharply as that," he stated.
While the naira has shown a nominal appreciation of 9% in 2025, experts caution that this improvement, achieved through massive government intervention rather than economic fundamentals, is likely temporary and unsustainable at current levels.
The combination of depleting reserves, increased external borrowing, and persistent structural economic challenges suggests the current exchange rate stability may be short-lived, with a market correction expected once intervention capacity diminishes.
