By Asmau Ahmad with agency report
Nigeria’s sovereign dollar-denominated bonds rose sharply as overseas investors welcomed the suspension late last week of Central Bank of Nigeria (CBN) Governor Godwin Emefiele, who oversaw multiple exchange rates that unsuccessfully sought to keep the naira strong.
The price of the West African oil producer’s eurobonds rose on Monday as much as 2.6 cents in the dollar before moderating slightly with many issues reaching their highest prices since late January, according to the Reuters news agency.
Longer-dated maturities saw the biggest gains with the 2049 maturity up 2.353 cents to 80.231 at 07:46 GMT, according to Tradeweb data.
Nigeria is facing severe dollar shortages, forcing many people to seek out foreign currency on the black market, where the naira trades much lower than its official exchange rate.
“We believe the changes signal a new era of focused, predictable monetary policy and a shift towards non-interventionism in the foreign-exchange regime,” Barclays economist Michael Kafe said in a note to clients on Monday about the suspension of the Central Bank chief.
President Bola Tinubu had criticised Emefiele’s handling of the naira and monetary policy at his inauguration two weeks ago.
Tinubu, who has promised to reset Nigeria’s ailing economy, has also removed a fuel subsidy and promised to consolidate the multiple exchange rates.
“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,” Kafe wrote.
Folashodun Shonubi, a Deputy Governor, was named acting head of the Central Bank.
The suspended governor is now in custody and under investigation, police said on Saturday.
In December, a court order blocked Emefiele’s arrest for suspected “terrorism financing”, saying there was a lack of evidence. It remains unknown if the arrest at the weekend is for the same charge.
