Nigeria's Buhari Rejects Devaluation, `Won't Kill' the Naira

  • Devaluation will only cause hardship for poor, says spokesman
  • Critics need to 'work much harder' to change president's mind

Nigeria’s President Muhammadu Buhari stood firm in rejecting calls to devalue the currency of Africa’s top oil producer, saying that he wouldn’t “kill the naira.”

Letting the currency fall would only result in higher inflation and cause hardship for poor- and middle-class Nigerians, Buhari said, according to an e-mailed statement from his spokesman Garba Shehu on Thursday.

Muhammadu Buhari

Photographer: Sean Gallup/Getty Images

“President Buhari said that proponents of devaluation will have to work much harder to convince him that ordinary Nigerians will gain anything from it,” Shehu said. “The president added that he had no intention of bringing further hardship on the country’s poor who, he said, have suffered enough already.”

The central bank of Africa’s largest economy has pegged the naira at 197-199 per dollar since March to stem its slide amid a rout in oil prices. The policy has led to a shortage of foreign-exchange and been widely criticized by investors and businesses, who blame the restrictions for exacerbating the country’s economic slump. Growth was 3 percent last year, the slowest pace since 1999, according to the International Monetary Fund.

Three-month naira forwards strengthened 3.3 percent to 226.57 per dollar on Thursday, the highest since Dec. 22. The black market rate has plunged as Nigerians have become desperate for foreign currency, falling to a record low of 306 per dollar this week.

Buhari was speaking at a meeting on Wednesday with Nigerians in Kenya’s capital, Nairobi, according to Shehu.

Nigeria’s Monetary Policy Committee resisted pressure to devalue the currency on Tuesday. Central bank Governor Godwin Emefiele gave no hint that curbs on imports and foreign-exchange trading would be lifted.

‘Needs Inflows’

Investors have questioned whether the regulator would weaken the currency without the president’s permission. Finance Minister Kemi Adeosun said in an interview last week that the central bank was “completely independent.”

Buhari “has been influencing the central bank, we see a situation where as commander-in-chief, whatever he wants to be implemented is what is done,” said Mike Nwanolue, a currency analyst at Lagos-based Greenwich Trust Group Ltd. Keeping the naira artificially inflated “is not good for a country that needs inflows and also intends to raise Eurobonds.”

Nigeria’s government plans to sell as much as $1 billion of dollar bonds to help fund a record budget deficit this year.

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