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Nigeria’s dollar debt surged after the surprise weekend ouster of the central bank chief, and as fresh comments on merging multiple exchange rates added to signs that President Bola Tinubu is resetting policies blamed for crippling Africa’s biggest economy.
Governor Godwin Emefiele was suspended by Tinubu after the markets closed on Friday, and then detained by Nigeria’s state security service a day later for unexplained “investigative reasons.” Folashodun Shonubi, a deputy governor in charge of operations at the bank, took over in an acting capacity.
Investors have welcomed the change because it signals a move away from unorthodoxy under the former bank chief. Emefiele’s policies — including allowing a complex regime of multiple exchange rates — had long been criticized by investors, economists and institutions like the World Bank.
Under his tenure, the central bank also loaned the government of former President Muhammadu Buhari 22.7 trillion naira (US$49 billion), helping push public debt to a record 77 trillion naira.
Nigeria’s international bonds jumped the most among emerging-market peers in trading on Monday, a public holiday in Nigeria, with its longest-dated dollar debt rising to the highest since January. The notes maturing in 2051 rose more than 3 cents on the dollar to as high as 73,74, the biggest gain this year.
The premium investors demand to hold Nigerian debt over US Treasuries fell 46 basis points to 710, the biggest drop this year, according to a JPMorgan index.
“This could spell the end of unorthodox and often conflicting and confusing monetary policies that held back economic growth and destroyed local and foreign investor confidence,” Ayodeji Dawodu, head of Africa sovereign and corporate credit research at BancTrust & Co in London, said by phone.– Bloomberg
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