…As US presses Nigeria for flexible exchange rate
By Blaise Udunze
THE Central Bank of Nigeria has disclosed plans to raise N218.89 billion ($1.10 billion) in short-dated treasury bills on April 7.
The apex bank on Wednesday said it will sell N55.40 billion of three-month and N33.49 billion of six-month bills and N130 billion of one-year debt, using the Dutch auction system.
The results of the auction are expected to be released on Thursday. According to the central bank’s issues calendar for treasury bills, the same amount of bills on offer will also be due for repayment on the day of the auction.
Nigeria issues treasury bills as part of a borrowing plan to finance part of the government budget deficit, help manage liquidity in the banking system and curb inflationary trends.
Meanwhile on the back of the instability and sharp drop in the value of naira, the United States said it will press Nigeria in talks this week to adopt a more flexible foreign exchange rate to boost growth and investment. U.S. Assistant Secretary of State for Africa, Linda Thomas- Greenfield, told an audience at the U.S. Institute of Peace that Nigeria should ensure the value of the naira currency versus the U.S. dollar was “more realistic.”
“While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially,” Thomas- Greenfield said. “Our recommendation is, and we will have discussions about it … that they should look at the exchange rate and try to make it more realistic to what the value of the naira is to the dollar,” she added. She spoke ahead of talks in Washington today between officials from the State Department, Pentagon and Treasury and their counterparts in the Nigerian government.
Nigeria faces its worst economic crisis in decades as falling price of oil has slashed revenues, prompting the central bank to peg the currency and introduce curbs to protect foreign exchange reserves, which have fallen to an 11-year low.
Some members of the Central Bank of Nigeria’s Monetary Policy Committee have said the naira should be devalued. Thomas-Greenfield said the parallel currency market in Nigeria was “alive and well,” warning that a rigid exchange rate, capital controls and import bans could undermine President Muhammadu Buhari’s efforts to expand economic growth and fight corruption.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and external investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods,” she said.