As Nigeria’s currency plumbed new lows, the nation’s minister for investment, trade and industry rebuked those obsessing over the prospect of a devaluation.

In an interview with Frontera News, Okechukwu Enelamah said the government was focused on finding ways to increase the supply of foreign currency and create some "flexibility" in the exchange-rate system.

"We shouldn’t fall into the trap that I think a number of journalists are falling into, which is getting obsessed, because the President said ‘I don’t like devaluation,’" Enelamah said in an interview at a conference in Washington last week.

"It's almost like trying to play a game to see who blinks first, and I think that's actually not wise."

Enelamah carries more weight with investors than many in President Muhammadu Buhari’s Cabinet.

The former Goldman Sachs banker founded Nigeria’s biggest private equity firm, African Capital Alliance, with $750m in assets.

The naira approached its weakest level against the dollar on record in the market for non-deliverable forwards this week on bets the government will be forced to devalue.

Nigeria’s existing policy of restricting the supply of dollars is crippling Africa’s biggest economy amid shortages of fuel and other imports.

The scramble for hard currency drove the black market to 324 naira per dollar, compared with an official rate around 198.

"What will come out of our policies, the market will respond well to," said Enelamah.

"Unfortunately, when the market doesn’t know this, it’s extremely short term."

While most other emerging-market currencies slumped against the dollar as a result of plunging commodity prices in the past year, Nigeria has resisted depreciation pressure.

Instead, said Enelamah, the government is working to address the "fundamental problem" by encouraging a diversification of the economy away from oil.

"We’re working on a foreign-exchange system that will increase supply and create some more flexibility," said Enelamah.

For some in the market, "it's like, give me the fix now – but if you're a parent, you know that you have to cook the food properly and then feed the child."

Source: Frontera News