Nigeria will float its embattled naira currency, the Central Bank governor
\nannounced Wednesday after months of pressure to control a spiraling crisis
\nin Africa’s biggest economy.<\/p>\n
Gov. Godwin. Emefiele told reporters the naira rate will be “market-driven”
\nfrom June 20.<\/p>\n
Critical foreign currency shortages caused by slumping oil prices forced a
\npolicy change that President Muhammadu Buhari for months had resisted. The
\nbank had defended the naira at a rate of 197 to the dollar while the
\ncurrency was trading at up to 370 on the parallel market .<\/p>\n
“They have to accept reality at some point after a period of denial,” said
\nAyo Teriba, CEO of Economic Associates consultancy. Companies were unhappy
\nwith the government forcing them to exchange their imported foreign
\nexchange at the low fixed rate and, when they needed to buy some, use the
\nparallel market at the much higher rate, he told The Associated Press.<\/p>\n
Emefiele indicated a floating naira should get rid of speculators.<\/p>\n
There will be only one exchange rate in “an open, transparent system,” he
\nsaid.<\/p>\n
Companies have gone bust, tens of thousands of workers have lost their
\njobs and militant attacks have shrunk oil production as Nigeria’s economy
\ncontracted for the first time in nearly 20 years.<\/p>\n
Companies with naira earnings that the government has refused to allow
\nthem to repatriate will take a hit. International airlines are holding the
\nequivalent of $600 million at the old exchange rate, according to the
\nInternational Air Transport Association.<\/p>\n
Analysts warn of expected interest rate hikes to tackle double-digit
\ninflation.<\/p>\n
“These actions are a down payment on our people’s ability to succeed,”
\nBuhari, under pressure to devalue since his March 2015 election, wrote
\nWednesday in The Wall Street Journal.<\/p>\n
“Longstanding structural imbalances and overdependence on imports have
\nbeen cruelly exposed,” Buhari wrote. “We are an oil-rich nation that
\nimports most of our gasoline. We are a farming nation that imports most of
\nour basic food staples.”<\/p>\n
Many Nigerians criticized the delay. “And they finally float the Naira, 9
\nmonths late. It will take us 2 years to recover from this unnecessary
\nstubbornness,” one said on social media.<\/p>\n
But Kevin Daly of Aberdeen Asset Management said he was “pleasantly
\nsurprised.” Many had expected the government to devalue, but not enough.
\nHe said it remained to be seen what the government can do to provide
\nliquidity with foreign currency reserves some $10 billion below the
\npublished figure of $26 billion.<\/p>\n
The gap between the value of exports and imports will decide the new naira
\nrate, Teriba said.<\/p>\n
Daly said the weakened naira would fuel inflation but “this is the price
\nthey have to pay for a failed policy … which has been like a noose round
\nthe neck of Nigeria’s economy.”<\/p>\n","protected":false},"excerpt":{"rendered":"
Nigeria will float its embattled naira currency, the Central Bank governor announced Wednesday after months of pressure to control a spiraling crisis in Africa’s biggest economy. Gov. Godwin. Emefiele told…<\/p>\n","protected":false},"author":1,"featured_media":47656,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-50203","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-exclusive"],"yoast_head":"\n