President against devaluing naira, sees recovery soon

January 28, 2016 2:17 PM

Nigeria's President Muhammadu Buhari is against devaluing the naira, his office said on Thursday, backing the central bank's stance of keeping rates unchanged in the face of sharp falls against the dollar on the black market.

A woman takes Nigerian Naira from a bank's automated teller machine in a file photo. REUTERS/Akintunde Akinleye

The central bank decided on Tuesday to keep the current official exchange rate against the dollar at around 197 compared to street rates as weak as 305.

Africa's top oil exporter is in the middle of an economic crisis as a slump in global oil prices has eroded public finances, hit the currency and dried up commercial banks' dollar supplies needed for basic imports.

"Likening devaluing the Naira to having it 'killed', President Buhari said that proponents of devaluation will have to work much harder to convince him that ordinary Nigerians will gain anything from it," his office said in a statement titled "President Buhari rejects devaluation".

Nigerian firms and foreign investors have complained that they cannot get hard currency to fund essential imports such as food or machinery spare parts.

Foreign stock and bond market investors have become reluctant to put money into Nigeria because they assume the West African nation will have to devalue its currency eventually.

Buhari also backed the central bank's decision to stop selling dollars to foreign exchange bureaus, saying: "We don't have the dollars to give to the BDCs (bureaux des change). Let them go and get it from wherever they can other than the central bank."

"We had just 74 of the bureaux in 2005, now they have grown to about 2,800," Buhari said, describing their business as a "scam and drain on the economy," according to the statement.

The central bank stopped the dollar sales this month to preserve dwindling foreign currency reserves, irritating Nigerians trying to get hard currency for travelling abroad.

Buhari was "optimistic that the Nigerian economy will stabilize soon with the efficient implementation of measures and policies that have been introduced by his administration," the statement said.

The former military ruler has said he wants to diversify the economy away from oil by boosting agricultural, mineral and other non-energy sectors, a plan previous administrations have tried in vain.