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Central bank reassures after Sanusi's dismissal

25 February 2014, 07:39

Lagos - The acting head of the central bank reassured investors on Monday that the removal of the former governor would not change policy to strengthen the economy.

President Goodluck Jonathan suspended the former Central Bank of Nigeria (CBN) governor Lamido Sanusi last Thursday over allegations of misconduct in a move seen by analysts as politically motivated.

Jonathan appointed Sarah Alade, the CBN's most senior deputy governor, to take the helm pending parliamentary confirmation of Zenith bank head Godwin Emefeile to succeed Sanusi.

Alade said "recent changes at the CBN will not in any way affect the monetary policy direction and pursuit of the bank's primary mandate of maintaining price and financial system stability".

Markets reacted negatively to Sanusi's removal, with the naira falling sharply against the US dollar, while most stocks in the banking sector also dipped.

Credit ratings agency Fitch said Sanusi's suspension and the market reaction to it were "the first major test of the more credible macro policy regime" that he helped establish.

But it warned in a note that if the sharp sell-off of currency continued, inflationary pressure would increase, raising the possibility of a rise in interest rates next month.

Alade said in an advertisement published in newspapers that the CBN had the capacity to meet the demands of foreign exchange users and there were no plans to devalue the currency.

"With the current level of reserves at seven months of imports cover as at end-December 2013, the bank's ability to intervene in the foreign exchange market is not in doubt," she said.

The economy grew at 6.87 percent in 2013 and was "strong, sound and resilient" despite the turmoil at the CBN.

Inflation had been in single figures for the last 13 months, she added. The exchange rate has also remained stable, she said, promising to sustain the momentum.

"The bank is committed to sustaining these achievements through the use of appropriate policy tools to ensure price and financial system stability," she said.

Sanusi has rejected the claims against him, believing he was removed for highlighting alleged widespread graft in the oil and gas sector.

He told AFP in an interview on Sunday that President Jonathan was a "simple man" who had been undermined by "extremely incompetent ... extremely fraudulent" aides.

Jonathan maintained that he was within his rights to sideline Sanusi -- and suggested he could yet return to serve out the remainder of his term of office.

"The president has absolute power to suspend the CBN governor," he told reporters in Abuja on Monday.

"Sanusi is still the governor of (the) CBN, people must know that. And that is why there can never be a substantive governor until the issues are sorted out.

"Sanusi could come back tomorrow to continue his work because the issues raised are issues that the board of (the) CBN with the Financial Reporting Council will deal with."

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