Devaluation hurting economy, says Buhari

President Muhammadu Buhari says he is opposed to a further weakening of the naira, and has endorsed the Central Bank’s policy of restricting foreign-exchange trading.

“I don’t think it is healthy for us to get the naira devalued,” Buhari said in an interview in Paris with France 24, broadcast yesterday.

The Central Bank is providing ample foreign exchange to “essential services, industries,” he said.

The unqualified presidential backing of the policy of Central Bank Governor Godwin Emefiele, is bound to dampen the clamour by analysts and portfolio managers for a further weakening of the currency of Africa’s largest oil producer.

After a halving of oil prices in the past year, the Central Bank of Nigeria reacted to the naira’s drop to a record low in February by extending trading curbs and introducing bans on purchases of dollars by certain importers.

And this was after the naira had been devalued by close to 23 per cent, sparking panic, but much of that has now receded.

While the currency has since stabilised, foreign investors, local businesses and even some of Monetary Policy Committee members have complained that it is overvalued.

Emefiele has consistently said the foreign exchange controls were helping to stabilise the naira and replenish reserves.

“These policies have led to a significant stabilisation in the exchange rate and an improvement in market sentiments,” Emefiele said last month, in a speech to Nigeria’s Senate in Abuja. The measures, coupled with efforts by the administration of President Buhari to cut wasted spending “have seen our foreign exchange reserves begin a gradual recovery,” he said.

The central bank started restricting currency trading in December in a bid to stem the fall of the naira, as the price of oil, Nigeria’s main export and source of two-thirds of government revenue, plunged. Last month, the central bank banned importers of about 40 items, including toothpicks, private jets and wheelbarrows from using official foreign-exchange markets.

Emefiele said Nigeria’s foreign-exchange reserves have risen to $31.9 billion on Tuesday, more than the figure of $29.6 billion from the central bank’s data for the same day.

The central bank has “zero tolerance for speculators,” Emefiele said in the speech. “Nigeria’s foreign reserves remain our common wealth and we must all strive to work together to protect it and prevent speculators and rent seekers from plundering it.”

While the measures have stabilised the naira at an average of 199.02 per dollar since the start of March, some critics including Atedo Peterside, chairman of Stanbic IBTC Holdings Plc, the local unit of Africa’s largest lender, Standard Bank Group Ltd say controls have left Nigerian companies unable to source the dollars they need to pay foreign suppliers.

“People underestimate the problems that exchange rate systems can pose to businesses,” Peterside said in an interview on Wednesday in Lagos, the commercial capital. “Instead of doing business, they’re devoting 40 percent of their time to scouting around for dollars, pulling crumbs together