State secret police arrested Godwin Emefiele over the weekend after Nigeria’s president suspended him.
Nigeria’s sovereign dollar-denominated bonds climbed dramatically as global investors cheered the suspension late last week of Central Bank governor Godwin Emefiele, who oversaw several exchange rates that failed to keep the naira strong.
According to Reuters, the West African oil producer’s Eurobonds jumped as much as 2.6 cents in the dollar on Monday before moderating, with many issues reaching their best levels since late January.
The 2049 maturity rose 2.353 cents to 80.231 at 07:46 GMT, according to Tradeweb data.
Due to chronic dollar shortages in Nigeria, many people buy foreign currency on the black market, where the naira trades substantially cheaper than its official exchange rate.
In a Monday note to clients, Barclays economist Michael Kafe said, “We believe the changes signal a new era of focused, predictable monetary policy and a shift towards non-interventionism in the foreign-exchange regime.”
Two weeks ago, President Bola Tinubu criticized Emefiele’s handling of the naira and monetary policy.
Tinubu has abolished a gasoline subsidy and promised to stabilize currency rates to revive Nigeria’s economy.
Kafe noted, “The haste with which the newly appointed president has begun to tackle the country’s economic challenges (e.g. the immediate removal of the fuel subsidy…) suggests that he is keen to pursue all the difficult reforms at the early stages of his term.”
The Central Bank’s acting governor is deputy governor Folashodun Shonubi.
Police stated Saturday that the suspended governor is in custody and under investigation.]
A December court judgment prevented Emefiele’s arrest for “terrorism financing” due to a lack of proof. The weekend arrest may be for the same offense.
