The naira remains undervalued by more than 13 percent despite extensive foreign exchange reforms and recent stability in the currency market, according to Bismarck Rewane, managing director and chief executive officer of Financial Derivatives Company (FDC).
Speaking at the Lagos Business School Breakfast session, Rewane said an assessment based on purchasing power parity suggests the local currency is trading below its fair value.
“Compared to the NFEM rate of N1,374.92 to the dollar, the naira is undervalued by 13.22 percent,” Rewane said during his presentation.
The naira strengthened against the dollar ending the week strong as Nigeria’s gross external reserves climbed to a record $50.04 billion, reinforcing investor confidence and boosting the Central Bank of Nigeria’s (CBN) capacity to support the local currency.
The economist explained that the conclusion was reached through an analysis of the prices of various consumer goods and services in Nigeria relative to international benchmarks.
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