President Muhammadu Buhari has given the nation’s central bank the go-ahead to introduce flexibility in the naira exchange rate, his spokesman said.
“The president is opposed to devaluing the naira, he has said so repeatedly,” Buhari’s spokesman, Garba Shehu, said in an interview on state-controlled NTA Television on Monday. “He has given them leeway to introduce what he has called ‘flexibility in managing’” the currency’s value, Shehu said, referring to the central bank.
Buhari said at the weekend he supported a stable currency, though he would keep “a close look at how recent measures affect the naira and the economy.” The comments, made four days after the Central Bank of Nigeria said it planned to introduce a more flexible exchange-rate regime, left traders guessing whether he supported those measures.
Nigeria has held the naira at 197-199 per dollar since March 2015, even as other oil exporters from Russia to Colombia and Malaysia let their currencies drop amid the slump in crude prices since mid-2014. Foreign reserves dwindled as the central bank of Africa’s largest oil producer defended the peg, while foreign investors, fearing a devaluation, sold Nigerian stocks and bonds.
Three-month non-deliverable naira forwards have weakened 38.5 naira to 285 per dollar since the central bank announced its change of direction, suggesting traders anticipate the currency may trade near that level in the event of a devaluation.