Highlights from Reuters coverage of Nigeria over the last seven days

Nigeria’s central bank, led by its governor Godwin Emefiele, was at the centre of the week’s biggest stories

In this week’s round-up: central bank devalues the naira, government seeks to cut budget by $4.9bn, petrol pump prices are lowered, and international airports are closed in bid to stop coronavirus spread.

  • It was a busy week, even by Nigeria’s standards. The impact of the coronavirus outbreak on the global economy, coupled with an oil price war, was evident for all to see. The central bank devalued the official currency rate by 15% on Friday, in a move to converge a multiple exchange rate regime which it has used to manage pressure on the naira, traders said. Only a week earlier, the bank had said “market fundamentals” did not warrant a devaluation. The currency in Nigeria, which is Africa’s biggest economy and relies on crude sales for 90% of foreign exchange earnings, has come under pressure after oil prices plunged following a disagreement between Russia and Saudi Arabia over a deeper production cut. The coronavirus outbreak has also hit global demand for oil. The central bank on Friday sold the U.S. dollar to local Jaiz Bank at 360 naira on the official market, weaker than the 306 where it was previously pegged for more than two years, traders said. The adjustment comes after the impact of the oil price plunge spread across asset classes in Nigeria, causing investors to widen spreads on the bond market, sell stocks and weaken the country’s dollar reserves. Currency analysts at one Nigerian asset manager said Friday’s adjustment signalled that the central bank favoured a convergence of its multiple exchange rates in order to realign the currency as an effective tool for resource allocation. Nigeria has operated a multiple exchange rate regime for years, which it has used to manage pressure on the currency. On the over-the-counter spot market few trades were done on Friday at 380 naira on thin liquidity, against 370 in the previous session, traders said. The bank also adjusted the forex rate for exchange bureaux to 380 naira per dollar from 360, in a sign it wanted to achieve a uniform exchange rate for the currency. Central bank governor Godwin Emefiele, who supports a strong currency, backed by President Muhammadu Buhari, has resisted calls for a devaluation, saying that market fundamentals do not support such move. But he has been burning through its reserve of $36 billion, which is now down 16% from a year ago, to prop up the naira. The bank’s move, of course, prompted much debate.
  • The move by the central bank came at the end of a week in which Emefiele said the bank would create a 50 billion naira ($163 million) fund to combat the impact of the coronavirus pandemic on Africa’s biggest economy and allow banks to give their customers more time to repay loans. He said the credit support for the health sector aimed to meet “potential increase in demand”. It was intended for loans to pharmaceutical companies planning to expand or establish drug manufacturing plants in Nigeria and to health companies that wanted to build hospitals and clinics. Other measures announced include cutting interest rates on some central bank loans to 5% per annum, down from 9%, for one year. Two days later, in another announcement, the bank said it would inject 1 trillion naira ($3.27 billion) into local manufacturing and import substitution to stimulate the economy.
  • Nigeria will close its two main international airports in the cities of Lagos and Abuja from Monday night, its civil aviation regulator said, as the number of coronavirus cases in the country almost doubled. The airports, which join three others around the country, will be shuttered for one month, the Nigerian Civil Aviation Authority said in a statement. The closure comes as Nigeria’s number of confirmed coronavirus cases rose on Saturday from 12 to 22, three of them in Abuja, the capital’s first positive identifications. “All airports in Nigeria are closed to all incoming international flights with the exception of emergency and essential flights,” the authority said. Nigeria said on Thursday it would close all schools and universities in the country due to coronavirus outbreak.

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.