Nigeria’s Exchange Rate to Stay Within 3% Band, Central Bank Governor Says

Nigeria’s official exchange rate will remain within the band of 3 percent above or below 150 naira per dollar even as foreign-currency demand grows amid elections, central bank Governor Lamido Sanusi said.

Nigeria sold $250 million at a foreign-exchange auction yesterday, less than the $351.1 million demanded by lenders, at 152.21 naira to a dollar, the weakest rate in more than a year at the Abuja-based central bank’s twice-weekly foreign-currency auctions.

“In a pre-election period all investments are suspect,” Sanusi said in a telephone interview yesterday, explaining increased demand for dollars as Africa’s top oil producer holds legislative, presidential and state governorship elections during April. “The band is wide enough to ensure flexibility without volatility.”

Investor concern over the recent surge of election and sectarian violence triggered increased domestic demand for foreign currency. That has weakened the naira, which reached an 18-month low to the dollar in inter-bank trading on March 17.

Elections for members of the national legislature on April 9, after two postponements, were generally orderly and reflected the will of voters, local and international observers said. It was a prelude to the presidential contest on April 16 that pits President Goodluck Jonathan against 18 rivals, including former military ruler Muhammadu Buhari and the former head of the anti- graft agency, Nuhu Ribadu. Voters on April 26 will choose the governors and legislatures of Nigeria’s 36 states.

Naira Band

Nigeria’s last vote in 2007 was condemned by local and international observers for being marred by violent intimidation of opponents, falsification of figures and ballot-snatching. Jonathan, who succeeded former President Umaru Yar’Adua on his death in May 2010, pledged to conduct free elections and appointed Attahiru Jega, a respected academic, to head the electoral commission.

The official exchange rate is currently at the “mid-point of the band” targeted by the central bank “and will be driven by considerations of sustainable trends and not short term pressure,” Sanusi said.

Foreign-currency reserves have climbed 8 percent this year to $35 billion on April 7, according to central bank figures, as crude surged 21 percent over the period.

To contact the reporter on this story: Emele Onu in Abuja at eonu1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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