• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Economy

Naira overvalued by 200%, may be devalued

3 years ago
in Economy, Features, highlights, Home, home-news, latest News, Markets
2 min read
0 0
0
89
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Naira overvalued by 200%, may be devalued

The Nigerian currency is over-valued by 200 percent and the Investors and Exporters (I&E) foreign exchange window rate may be devalued next month, Bismarck Rewane, managing director of Financial Derivatives Company Limited (FDC).

The naira has depreciated against the dollar across the Nigerian foreign exchange market in recent weeks. It fell to N431 per dollar, its lowest since the introduction of the I&E forex window, which is the official window.

It weakened to a record low N710 per dollar on the parallel market, popularly called black market, last month.

“Most currencies are undervalued but Nigerian naira [is] overvalued by 200 percent,” Rewane said at a breakfast session at Lagos Business School (LBS) in Lagos.

“The naira will likely depreciate again towards the N695/$-N700/$ range at the parallel market. The CBN will allow for a partial crawling peg in the forex market, and bring the I&E rate down to N440/$ in September.”

About 48 countries in the world, including nine African countries, operate floating or flexible exchange rate regimes, according to him.

RelatedPosts

BoG Reports 15.19% Decline in Dud Cheques Issued in 2024

Credit Bureau Searches Surge 114.6% in 2024 on Back of Digital Loan Growth 

Naira Stable as External Reserves Hit Eight-Month High of $40.15bn

He said the Big Mac index is extreme – considering just one product but it is used to measure the level of overvalued currency and as a strategy to encourage exports.

Demand pressure and limited foreign currency inflows triggered depreciation of the naira, widening exchange rate premium, FSDH Research said in its macroeconomic report.

Despite the increase in oil price, external reserves were under pressure in the second quarter of 2022, FSDH analysts said.

Nigeria’s external reserves, which stood at $40.52 billion in 2021, have declined to $39.18 billion in 2022, data from the FDC said.

Nigeria’s rising import bill and low inflows from non-oil exports continue to exert pressure on exchange rate and external reserves, Rewane said.

“Forex market in Nigeria is a price discriminatory monopoly. The barriers between the markets are thin and permissible. Multiple exchange rates create room for arbitrage and encourage rent-seeking behaviour,” he added.

Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited, said the direction of the naira in the short term will largely depend on the ability of the country to exports both oil and non-oil goods and services, attract foreign direct investments (which can happen through the provision adequate security of lives and property in the country) and the country’s ability to create an enabling environment that will ensure that it produces goods that it has competitive advantage over other country to reduce imports.

“I agree that the naira is currently mispriced in view of Nigeria’s inflation rate and other economic fundamentals relative to the United States,” Uche Uwaleke, professor of capital market, said.

He said this had equally become evident against the backdrop of the US Fed’s interest rate hike, capital flow reversals currently being experienced by most emerging economies including Nigeria and the strengthening of the US dollar against other world currencies.

He said: “Be that as it may, it is near impossible at this time to determine the real Exchange rate of the naira given peculiar behavioural aspects which do not lend themselves to financial modelling.

“To this end, attempt to estimate the degree by which the naira is overvalued is only tantamount to an academic exercise. More than this, the theoretical bases for determining exchange rates including the Purchasing Power Parity, the Real Effective Exchange rate, the Fundamental Equilibrium Exchange rate, etc. all have conditions and assumptions which are not met in Nigeria’s current situation.”

Uwaleke said: “The crawling peg argument, in which the naira is pegged to a band and allowed to fluctuate within it, appears persuasive but it must be borne in mind that it can only be successful in a low inflation rate environment supported by multiple streams of forex else the band breaks down and suffers from frequent adjustments.

“I think the naira will stabilise and the parallel market premium will narrow in the medium term following improvements in forex liquidity on the back of the gradual increase in the forex inflows from Non-oil sources largely on account of the RT 200 FX programme of the CBN.”

Source: businessdayng
Via: norvanreports
Tags: Investors and Exporters (I&E) foreign exchange windowmay be devaluednairaNaira overvalued by 200%
No Result
View All Result

Highlights

Helicopter Crash: One Ghana Movement Calls for State-Funded Life Insurance Policy for Dependents of Government Appointees

Government on Course to Exceed 2025 Macroeconomic Targets 

Finance Ministry Invites Public Input for 2026 – 2029 Budget

CHAN 2024: Uganda Dominates Guinea; South Africa Holds Algeria

Ipswich Salvages Late Point in Championship Opener Against Birmingham

GFA and BetPawa Enhance partnership; Locker Room Bonus Extended to Malta Guinness Women’s Premier League for 2025/26 Season

Trending

Banking & Finance

BoG Reports 15.19% Decline in Dud Cheques Issued in 2024

August 9, 2025

BoG Reports 15.19% Decline in Dud Cheques Issued in 2024 The Bank of Ghana’s (BoG) Credit Reporting...

Credit Bureau Searches Surge 114.6% in 2024 on Back of Digital Loan Growth 

August 9, 2025

Naira Stable as External Reserves Hit Eight-Month High of $40.15bn

August 9, 2025

Helicopter Crash: One Ghana Movement Calls for State-Funded Life Insurance Policy for Dependents of Government Appointees

August 9, 2025

Government on Course to Exceed 2025 Macroeconomic Targets 

August 9, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.