The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, has said that Nigeria must stop oil leakages to strengthen the naira.
Rewane stated this during an interview on Channels TV’s Politics Today, noting that the country must remove restrictions to allow money to flow in.
When asked what Nigeria should do to strengthen naira, he said, “To call a spade a spade, the truth is that the two variable currencies are about 20% to 25% undervalued, what we call political risk premium.
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“If you use the purchasing power analysis, it will come close to N700 naira at this time. Another thing is the flow. We have $24 to $25 billion dollars. It’s coming in through a dubious process adding more risk to it.
“The first thing to do is to ask yourself when the currency began to depreciate? If we go back historically in 1986 it was N1 to $1 officially. It was traded N2.50 and it was N4 in the parallel market. So N1 to N4 is 300%.
“Today the official rate is N700 and in the parallel market is N1000. so there is 20% deviation from the official rate. So the level of undervaluation is based on the data. It’s 25% compared to 30% in 1987.
“What we need to do is to come clean to level our result. Make sure your oil is not stolen because the stolen oil is sold and brought back. And then remove most of the restrictions so that money can flow in. When you do that you would begin to see that the currency begins to trade at a square value.”
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