Naira may weaken further after CBN rate cut, but Rewane says the fall will be limited
By Aboki Forex —
The naira could come under fresh pressure after the Central Bank of Nigeria cut its benchmark interest rate to 23%, economist Bismarck Rewane has said. But the Chief Executive Officer of Financial Derivatives Company (FDC) argues the currency will not fall as hard as the market fears.
Rewane made the projection while speaking on Channels Television on Wednesday, September 22, 2026.
Why the naira will not crash hard
Rewane said the naira's fair value sits at about N1,150 to $1, which limits how far it can slide from current levels.
"The naira will depreciate, but not as much as fear, because the naira fair value is about N1,150 to $1," he said.
The rate cut has pulled Nigeria's real rate of return down from about 11.1% to 7.61%. Even so, Rewane said that return remains attractive when set against some advanced economies, which should keep foreign investors interested in carry trades.
He said the interest rate gap between Nigeria and major global economies is still wide enough to draw foreign capital, even after the CBN lowered borrowing costs.
Portfolio inflows and the remittance cushion
Rewane warned that the cut could weaken foreign portfolio investment (FPI), as investors may find Nigerian assets less appealing when returns fall.
He suggested remittances from Nigerians abroad could increasingly fill any gap left by softer portfolio inflows.
The FDC boss also flagged the impact on domestic savings. Lower deposit rates, he said, could discourage Nigerians from keeping money in traditional savings instruments.
"You either save or you consume, but the national savings is very low. So when you do this, it falls further," he said.
Nigeria's national savings stand at about N97 trillion, against an estimated gross domestic product of N442 trillion, according to Rewane.
He said weaker returns on naira-denominated savings could push investors into alternative assets, including foreign currencies and cryptocurrencies.
"The danger is that you may then begin to start to buy alternative assets, which includes dollars, Bitcoin," he said.
What Rewane wants from fiscal authorities
Rewane said the country needs to grow its savings base because savings supply the capital for investment, which in turn supports productivity and broader economic inclusion.
He stressed that lower interest rates must come with stronger fiscal consolidation and measures to cut leakages in government finances. Without that, he said, monetary easing may fail to deliver sustainable growth and instead add pressure on the naira and the wider economy.
For Nigerian businesses and consumers, the signal is mixed. Cheaper borrowing costs offer relief on credit, but weaker savings returns and a softer naira raise the cost of imports, travel and dollar-linked obligations.