28.5 C

Suspension of Central Bank Governor Boosts Nigeria Eurobonds

The suspension of Nigeria’s Central Bank governor, Godwin Emefiele, has had a positive impact on the country’s sovereign dollar-denominated bonds, resulting in a significant rise. Emefiele was responsible for implementing multiple exchange rates in an attempt to strengthen the Nigerian naira, which proved unsuccessful.

According to Reuters, the price of Nigeria’s eurobonds, particularly those with longer-dated maturities, experienced substantial gains. Some bonds reached their highest prices since late January. Tradeweb data shows that the 2049 maturity bond increased by 2.353 cents to 80.231 at 07:46 GMT.

Nigeria currently faces severe dollar shortages, leading many individuals to resort to the black market to acquire foreign currency. In this unofficial market, the naira trades significantly lower than its official exchange rate.

- Advertisement -

The suspension of the Central Bank chief is seen by experts as a signal of a new era characterized by focused and predictable monetary policy, as well as a shift towards non-interventionism in the foreign exchange regime. Barclays economist Michael Kafe expressed this sentiment in a note to clients, highlighting the potential positive implications of the change.

President Bola Tinubu, who recently assumed office and pledged to revitalize Nigeria’s struggling economy, had criticized Emefiele’s management of the naira and monetary policy during his inauguration two weeks ago. Tinubu has already taken steps such as removing the fuel subsidy and committing to consolidate the multiple exchange rates, demonstrating his determination to address the country’s economic challenges.

Barclays economist Kafe noted that Tinubu’s prompt action in tackling these issues suggests a commitment to pursuing difficult reforms early in his term.

Following Emefiele’s suspension, Folashodun Shonubi, a deputy governor, has been appointed as the acting head of the Central Bank.

- Advertisement -

The suspended governor is currently in custody and under investigation, as confirmed by the police on Saturday.

While you're here, we just want to remind you of our commitment to telling the stories that matter the most.Our commitment is to our readers first before anything else.

Our Picks



Get the Stories Right in Your Inbox