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.

While the acting governor pledged continuity in policy on Feb. 21, saying there were no plans to devalue the currency, the central bank will have to fight to keep the naira within its targeted range of 3 percent above or below 155 at twice-weekly foreign-exchange auctions. The peg may be shifted to 170 per dollar, boosting inflationary pressures, according to Yvonne Mhango at Renaissance Capital.