Nigeria Can't Change FX Rules to Satisfy Portfolio Investorsby
Nigerian Vice President Yemi Osinbajo said the nation can’t change its foreign-exchange rules to satisfy portfolio investors, giving support to the central bank’s currency controls.
The government wasn’t “unduly worried” by a decision from JPMorgan Chase & Co. to remove the nation’s bonds from its emerging-market bond indexes, Osinbajo said in an interview with a church organization, which was broadcast on Channels TV on Thursday. Nigeria’s inclusion in the indexes in 2012 had attracted “hot money” into the economy, which has now reversed, he said.
The naira’s plunge to a record low in February following a slump in oil prices prompted Central Bank of Nigeria Governor Godwin Emefiele to extend restrictions on trading and introduce bans on purchases of dollars by certain importers. While the controls have helped to stabilize the currency of Africa’s largest oil producer, it’s put Emefiele at odds with investors and even fellow central bankers, who say the naira is overvalued.
“We need short-term foreign exchange controls even at the risk of delisting at JPMorgan,” Osinbajo said. The restrictions “have really been successful. They’ve led to a situation where our foreign-exchange reserves have stabilized and our current-account deficit has narrowed, which is good in the short term, but it can only be short term.”
Osinbajo’s comments echo those of President Muhammadu Buhari, who said on Sept. 16 that he opposes a further devaluation of the naira.