It would be “insane” for Nigeria to persist with currency policies that have led to a record spread between the official and black-market exchange rates, the local head of Unilever Plc has said.
“It would be very insane to continue like this for months and months,” Unilever’s Africa President Bruno Witvoet, was quoted by Bloomberg to have said in interview at a conference in Abidjan, Ivory Coast’s commercial capital.
Clarity on what the “right rate” is would help businesses “make more sensible decisions,” he said. The Central Bank of Nigeria introduced capital controls and restrictions on some imports in a bid to prop up the naira, which has been effectively pegged at N197-N199 against the dollar since March 2015.
Those measures have deterred foreign investment and led to a scarcity of dollars, with the black-market exchange rate falling to around N325 per dollar.
President Muhammadu Buhari has backed the central bank’s stance and ruled out a devaluation on the grounds it would cause prices to rise.
That’s already happening, with inflation surging to a three-year high of 11.4 percent in February from 9.6 percent the previous month.
Buhari said in a speech on Monday that the hard-currency squeeze is “a temporary phase, which we shall try to overcome.”
CBN Governor Godwin Emefiele is set to announce the Abuja-based central bank’s next interest rate decision on Tuesday and few analysts think he will announce a change in the foreign-exchange policy.
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