‘Free float would send naira tumbling’

Bloomberg

A free float of Nigeria’s naira would cause capital flight and a “massive devaluation,” according to central bank Governor Godwin Emefiele.
The nation’s current system of multiple exchange rates had produced the “most optimal results when compared with other emerging markets in recent times,” Emefiele told reporters after a meeting of the monetary policy committee (MPC).
Emefiele was responding to criticism last week from Atiku Abubakar, the main opposition candidate in next month’s presidential election. Abubakar, a businessman and former vice president, said in an interview with Bloomberg he would float the currency if he wins the February 16 vote and replace Emefiele in June, when his first term ends.
Under Emefiele, who was appointed in 2014, Nigeria has tightened capital controls and closely managed the naira’s value. The governor has consistently said this is the best way to curb inflation and boost manufacturing by discouraging imports. Several foreign investors have faulted the policy and said it exacerbated an economic downturn triggered by the 2014 crash in oil prices.
The MPC held its main interest rate at a record high of 14 percent and warned of rising inflationary pressures. Prices rose 11.4 percent year-on-year in December, the highest rate in seven months.
Emefiele, 57, also said the central bank would increase restrictions on companies buying foreign exchange for imports. That would include putting more food items on a list of foreign goods for which purchases of dollars from banks are banned, he said.