Nigeria’s currency is at risk of being devalued after President Goodluck Jonathan suspended the central bank governor last week, eroding confidence in monetary policy and sending the naira to a record low.
The naira, which rose for the first time in six days yesterday, posted its biggest five-day drop in eight months last week. The yield on Nigeria’s July 2023 dollar bond had its steepest one-day jump on record after Lamido Sanusi’s removal on Feb. 20. The security has lost 2.3 percent this year, compared with a 0.6 percent drop in the JPMorgan Chase & Co. index of African sovereign debt.
The naira has declined in five of the past six years, dropping 2.6 percent in 2013 as the Federal Reserve announced plans to cut stimulus. It last posted an annual gain in 2012.
“Sanusi’s suspension is unequivocally negative for Nigerian assets and puts the CBN credibility at stake,” Kevin Daly, who oversees about $10.5 billion in emerging-market and Nigerian debt as a money manager at Aberdeen Asset Management in London, said in a Feb. 20 e-mail.