Nigeria's pegged exchange rate policy appears unsustainable and undermines government efforts to attract investment and diversify the economy away from oil, the chairman of local lender Stanbic said on Tuesday. The comments are among the toughest yet from business leaders who have criticized hard-currency curbs imposed by the central bank to preserve the country's dwindling foreign reserves despite a slump in vital oil revenues.
As a result, the naira has fallen on the parallel market by almost 50 percent in recent weeks as the central bank struggles to meet importers' dollar demand on the official interbank market, funnelling demand to unofficial dealers. "The greatest policy uncertainty ...is an exchange rate policy regime that threatens the foundations of macroeconomic stability and appears to be unsustainable," Stanbic Chairman Atedo Peterside told an investor conference in the commercial capital Lagos. "Efforts at economic diversification are...hampered by exchange rate uncertainties," he said. The Stanbic chairman said dollar shortages in Africa's top oil producer had reached levels where "most investors here are currently caught up in a frenzied pursuit of the cheapest available dollars."
"Everybody wants to take foreign exchange out and nobody really wants to bring it in," he said. "Without investment there will be no new jobs." On Tuesday, the naira rallied for the second day, firming to 364 on the parallel market from 375 on Monday, after President Muhammadu Buhari rejected a devaluation of the currency. The official rate is 197.
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