Nigeria’s Central Bank Governor Godwin Emefiele has come out swinging against so called ‘naira speculators’, vowing that they will lose their shirts.
This is after analysts predicted that the CBN would have to abandon its stubborn naira – dollar peg and devalue the currency after Kazakhstan became the latest country to abandon its own currency peg.
Ugochukwu Okoroafor, a spokesman for the CBN, said today:
“We haven’t seen any reason so far to institute a change in the foreign-exchange policies. The preponderance of foreign currency in the country has led to speculative attacks on the naira. People who have done it in the hope we’ll devalue will be hurt.”
While it is all well and good for the CBN to talk up the naira, they must realize that Nigeria is now plugged in to the global economy, partly also as a result of the CBN (under Sanusi Lamido Sanusi) actions to encourage hot money inflows in the past 5 years.
Now as commodity prices tumble for a seventh week, Emerging Market currencies are also tumbling.
South Africa’s rand dropped today to a 13 1/2-year low against the dollar.
Kazakhstan’s tenge plunged a record 23 percent after the country relinquished control of its exchange rate.
Currencies of commodity exporting countries such as Malaysia, Russia, Brazil and Mexico have also tumbled in recent weeks.
With oil looking to test the $30 mark, and the naira historically closely tracking the Kazakhstan currency (Tenge) it remains to be seen where the CBN is getting its bravado from.