President Muhammadu Buhari
Nigeria's President Muhammadu Buhari on Monday told a gathering of
business leaders that he did not see the benefit of the naira's currency
peg against the U.S. dollar being removed.
Nigeria's central bank abandoned the naira's 16-month old exchange
rate peg, of 197 naira to a dollar, a week ago in an effort to alleviate
the chronic foreign currency shortages that have choked growth in
Africa's biggest economy.
The naira ended at 282 to the dollar on Monday but was trading at round 350 on the black market.
"I don't like the returns I get from the CBN (Central Bank of Nigeria),"
said Buhari, addressing a group of business leaders that included
Africa's richest man, Aliko Dangote, Zenith bank founder Jim Ovia and
oil billionaire Femi Otedola.
The 73-year-old former military ruler, addressing the group at his
official residence in the capital, Abuja, said the devaluation of the
naira in 1985 saw the naira trading at 1.3 to the dollar, whereas "now
you need 300 or 350 naira to a dollar".
"How much benefit can we derive from this ruthless devaluation
of the naira? I'm not an economist neither a businessman - I fail to
appreciate what is the economic explanation," said Buhari.
In a June 3 letter to Buhari, seen by Reuters, the central bank
governor said he hoped the naira would eventually trade at around 250
per dollar, a level the president had "approved".
Buhari had consistently said he was opposed to the removal of the
currency peg but, in an essay published in the Wall Street Journal
earlier this month, appeared to back the adoption of a more flexible
foreign exchange policy.
The economy in Nigeria, an OPEC member, has been hit hard by the
sharp drop in global oil prices since the country's crude oil sales make
up about 90 percent of foreign exchange earnings and 70 percent of
government revenues.
Foreign exchange restrictions were imposed by the central bank last
year in an attempt to conserve dwindling U.S. dollar reserves.
"What has happen to us now is that we have manoeuvred ourselves into mono-economy which led to the collapse we are seeing now," said Buhari.
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