Nigeria’s Buhari gets cold feet over devaluing currency, rules it out as ‘dreadful’

There had been strong speculation of a more flexible rate of exchange, which would have been seen as Buhari climbing down.

NIGERIAN president Muhammadu Buhari ruled out currency devaluation and said he plans to hold talks with leaders in the Niger River delta as attacks on oil installations sap the nation’s economy.

The government has “resolved to keep the naira steady,” Buhari said Sunday in a television broadcast to mark his first year in office. 

“In the past, devaluation has done dreadful harm to the Nigerian economy.”

There had been fevered speculation that the government was set to adopt a more flexible rate of exchange, an approach that would have been seen as Buhari climbing down in the face of intense market faces.

The government maintains a currency peg, but this has been trading at almost half what is in the black market, hurting importers.

This past week British Airways said it was evaluating its routes to the country, as it struggled to repatriate money out of the country. On June 30, US carrier United Airlines will operate its last flight to Nigeria, as it cited traffic weakness and the difficulties in collecting money from tickets sold.

Madrid-based Iberia on May 12 stopped flights to Lagos.

Read: Why US carrier United Airlines is pulling Nigeria route, ending its only flight to Africa

Africa’s largest economy shrank for the first time since 2004 in the first quarter as the government contends with lower global crude prices and production losses caused by violence in the oil-rich delta region. The country derives about two-thirds of state revenue from crude.

Buhari aims to curb attacks in the delta region through steps including a revamped amnesty program for ex-fighters and talks with leaders in the region.

“The recent spate of attacks by militants disrupting oil and power installations will not distract us from engaging leaders in the region in addressing Niger delta problems,” Buhari said.

—Bloomberg. Additional reporting by M&G Africa

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