Rewane proposes devaluation of naira after GDP rebasing

Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the recent rebasing of the country’s Gross Domestic Product (GDP) would only be meaningful when the naira depreciated.

Rewane made this remark at the Lecture Series of Securities and Exchange Commission in Abuja on Tuesday.

He said the drop in global commodity prices had made the call inevitable.

He stressed that the rebasing of the GDP raised a compelling need for the redirection of the nation’s economy.

Rewane explained that the currency pressure on the economy generated by the rebasing would continue to increase.

According to him, the monetary tightening measures currently being adopted by the Central Bank of Nigeria is a temporary solution to the exchange rate problem.

Rewane said the divergence between the official and parallel market exchange rates had risen to six naira.

“The 22.02 per cent decline in external reserves from N48.86 billion to N38.1billion has made it imperative to depreciate the naira,” he said.

He called on the monetary authorities to consider official depreciation of the naira by three per cent from between N150 and N160 to a dollar to N155 and 165 to a dollar.

“There is need for an adjustment in the currency value. We need a depreciation of the currency because anything less than 10 per cent is not devaluation but depreciation.

“The adjustment we are talking about is moving the band from between N150 and N160 to N155 and 165 to a dollar.

“So, if you have a three-per cent movement, it is not going to destroy the country,” he said.

Rewane said that global commodity prices had gone down below the adjustment of the currency, adding that aluminium prices had gone down by about 40 per cent and wheat prices by 25 per cent.

He stated that since the economies of most of Nigeria’s trading partners were not controlled by the dollar, a three-per cent depreciation of the nation’s currency would not harm its economy.

“The depreciation of the naira could be used as strategic tool for redirecting the economy in line with current economic realities,” he said.