(Adds bonds, details, background)
LAGOS Feb 24 The Nigerian naira fell 0.5
percent on Monday while yields on government debt were broadly
stable, as offshore investors remained on the sidelines even as
dealers said turbulence at the central bank had largely been
priced in locally.
The local currency has been under heavy selling
pressure since President Goodluck Jonathan suspended
internationally respected central bank governor Lamido Sanusi on
Thursday, removing an increasingly outspoken critic of the
government's record on tackling corruption.
The naira was trading at 166.20 to the dollar at 1005 GMT.
Dealers said much of the panic of the last two days was
starting to subside, especially since the central bank had shown
willingness to intervene to prop up the naira.
Markets have been panicked over the suspension of Sanusi,
whose policies are credited with stabilising the naira and
bringing down inflation in Africa's second-biggest economy to
single digits. The currency fell to a record low on Thursday of
169 to the dollar, until the bank intervened to prop it up.
It was at 164.05 to the dollar before the news, so even
after two interventions it is more than 1 percent down.
"People are still cautious," said one currency dealer.
"Offshore investors are on the sidelines, waiting for the storm
to calm down before they come back again."
For some local players, that reticence was a buying
opportunity. Local pension funds bought up debt being sold off
by foreign investors, with the result that the benchmark 10-year
government bond yield was stable at around 13.8 percent, or
about 10 basis points below Friday's close.
Other maturities were also broadly stable.
Acting central bank governor Sarah Alade sought to calm the
markets on Friday, pledging to maintain Sanusi's monetary
policies and keep the naira within its target band of 150-160 to
the dollar. Zenith Bank managing director Godwin
Emefiele has been named to take over in June.
Sanusi, whose term was due to end in June, had been
presenting evidence to parliament that he said showed the state
oil company Nigeria National Petroleum Corporation (NNPC) failed
to remit $20 billion it owed to government coffers.
NNPC has repeatedly denied Sanusi's allegations.
Longer term, it is doubtful foreign investors will turn off
Nigeria, always a turbulent place to invest but still highly
alluring because of its oil wealth, potentially massive consumer
market and dynamic economy.
(Reporting by Tim Cocks and Chijioke Ohuocha; Editing by Susan