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Naira falls on Sanusi sacking

February 21, 2014

Nigeria’s currency, the naira, has stayed in free-fall, the day after the suspension of graft-fighting central bank chief Lamido Sanusi. Analysts say the move makes investors nervous and will encourage capital flight.

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The Nigerian naira. Photo: Getty
Image: Getty Images

Nigeria's currency traded at about 167 naira to the US dollar on Friday, down by 1 percent and continuing a slide at the same rate as Thursday.

On Friday, trading in the currency of Africa's most populous state was partly suspended to stem the rapid depreciation. According to the Nigerian central bank, efforts were underway to stabilize the naira in a corridor of between 150 and 160 naira to the dollar.

Nigeria's currency woes came in the wake of the suspension of reformist Central Bank Governor Lamido Sanusi by President Goodluck Jonathan. Jonathan accused Sanusi of financial recklessness and misconduct following an independent audit into missing oil revenue commissioned by parliament.

Last year, Sanusi reported that $50 billion (36 billion euros) worth of oil sold by state-owned Nigerian National Petroleum Corporation had not been paid to the government. On Friday, Sanusi repeated his claim in an interview with news agency Reuters.

“Oil prices have not come down, oil output has not come down, but oil revenues are crashing. Therefore my job as central bank governor in managing the exchange rate and reserves is threatened,” he said.

Africa economic study released

Meanwhile, analysts are worried about the turmoil in Nigeria, which was expected to overtake South Africa as the continent's biggest economy in the course of this year, according to the International Monetary Fund (IMF).

Nigerian economist Bismarck Rewane warned of a very difficult time for the naira and Nigeria's financial market in the near-term. He told news agency AP that Sanusi's ousting raised questions about the future independence of the central bank. Adeola Adenikinju, economist with Nigeria's University of Ibadan, told the same news agency that such a move would make investors jittery and encouraged capital flight.

uhe/ph (AP, AFP, Reuters)