Nigeria’s Central Bank Governor nominated for second term

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The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has been nominated for a second five-year term.

According to a letter read on the floor of the senate, President Muhammadu Buhari who has backed Emefiele’s monetary policy, nominated him for another term. The upper house of parliament is expected to confirm the nomination.

The news could comfort bondholders keen to see the bank’s policy of a stable and strong currency continue.

Emefiele has overseen an interventionist currency policy at the behest of the presidency, propping up the local naira by pumping billions of dollars into the foreign exchange market. He also introduced a multiple exchange rate regime to try to mask pressure on the naira and avoid a series of devaluations, a step that has kept liquidity tight in Africa’s biggest economy.

CBN cut rates to 13.4 percent in March, its first rate cut since November 2015. The rate has been held at 14 percent since July 2016 to support the naira and curb inflation.

Emefiele has also offered affordable credit to boost some industries to offset curbs on access to foreign exchange for those sectors imposed to protect local producers.

The Governor, whose first term was due to end this month, will be the first central bank governor to have his tenure extended into a second term since Nigeria’s return to democracy in 1999.

The head of research for Africa at Standard Chartered Bank in London, Razia Khan said “the idea of continuity might give some comfort to foreign investors who will expect a policy of naira stability to continue. This lessens the risk of any near-term profit-taking”.

Analysts say Emefiele’s return could be supportive for bonds as investors hunt for yields on the debt market while equity players worry about slow growth, expecting sentiment to remain weak for stocks. More than $6 billion has flowed into the local bond market since February’s presidential election as foreign investors piled into debt to lock in yields as high as 14 percent, helping to keep the currency stable.

Emefiele has said the bank would continue its tight monetary stance in the near term and sees inflation of 11.3 percent in February rising to 12 percent this year before moderating.

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