Nigeria Central Bank Hits Out at ‘Unpatriotic’ Policy Critics

LAGOS (Capital Markets in Africa) – Nigeria’s central bank lashed out at critics of its efforts to prop up the naira and said that weakening the currency would only harm poor people.

“Intelligence reports at the disposal of the bank reveal the involvement of some unpatriotic elements funding the push to have the Central Bank of Nigeria and the federal government reverse its foreign-exchange policy,” Isaac Okorafor, a spokesman, said in a statement on the Abuja-based central bank’s website. “Self-centered individuals, who have failed to assail our patriotic position, have resorted to the sponsorship of serial propaganda to misinform and mislead the public on the objectives of our policies.”

The central bank will continue to ration foreign exchange and “ensure that the masses of our country’s low-income earners are protected from the vagaries of high naira depreciation,” Okorafor said.

With President Muhammadu Buhari’s support, Governor Godwin Emefiele has tightened capital controls to protect foreign reserves and defend the naira amid the rout in the price of oil, which accounts for 90 percent of Nigeria’s exports. Emefiele relaxed some trading restrictions in June, sparking a near-40 percent plunge in the naira, but said this week the central bank would maintain its “managed float” and intervene in the market to prevent further depreciation. While the currency trades at around 315 per greenback on the official interbank market, its rate has plummeted to 498 on the black market.

Fitch Ratings Ltd. said on Jan. 24 that dollar shortages are hurting the economy, which probably contracted last year for the first time since 1991. The rating company revised Nigeria’s credit outlook to negative from stable, saying that access to foreign exchange “will remain severely restricted until the CBN can establish the credibility of the interbank foreign-exchange market and bring down the spread between the official rate and the parallel market rates.”

Emefiele has also been criticized by several prominent Nigerians, including his two immediate predecessors, Emir Muhammadu Sanusi II and Charles Soludo.Doyin Salami, a member of the Monetary Policy Committee, said in November the bank’s stance had led to the “almost complete erosion” of its credibility.

The forward market suggests the naira will depreciate further, whatever the central bank does. Contracts maturing in 6 months rose 0.2 percent to 353.31against the dollar as of 9:35 a.m. in London, while 12 month forwards fell 0.1 percent to 404.