Naira up to 370 as Buhari insists no devaluation

The naira firmed sharply on Monday to 375 against the dollar on the parallel market, following President Muhammadu Buhari’s insistence that the currency will not be devalued.

Speaking at the Africa business forum in Egypt on Saturday, Buhari restated his commitment to not devaluing the naira, in the face of widening gap between official and parallel market.

“Developed countries are competing among themselves and when they devalue they compete better and manufacture and export more,” he had said.

“But we are not competing and exporting but importing everything including toothpicks. So, why should we devalue our currency?

“We want to be more productive and self-sufficient in food and other basic things such as clothing. For our government, we like to encourage local production and efficiency.”

After the president’s comments, Nigerians were divided over the reaction of the naira on the parallel market by Monday, with many claiming the naira would fall further.

However, the currency firmed four percent from Friday’s close of 390 to the dollar, while the official interbank rate remained at 199.50 to the dollar at the close of trading on Monday.

Aminu Gwadabe, the head of Nigeria’s bureaux de change association, told Reuters that bureau de change operators were working to introduce a single quote across the parallel market and maintain a bid-ask spread of 3.5 percent for trades.

“We have set up a unit to monitor compliance with the new measures,” he said, adding that the central bank had been informed of the measures.

He also said the market was trying to adjust to the reality of no currency devaluation by the government.

In a bid to control the movement of the foreign reserves, and conserve dollars, the CBN halted sales of foreign exchange to the parallel market in January.

Since January, the naira has been growing weaker, and the reserves have fallen to its lowest since 2005.