LAGOS: ANALYSTS projected the Central Bank of Nigeria (CBN) to devalue the local currency only after the upcoming general elections.
The bank’s Monetary Policy Committee met yesterday amid high likelihood it would devalue the currency and alter interests rates.
The CBN faced the arduous task of having to evaluate whether the measures it enacted in November 2014 were sufficient to counter the effects of sluggish global growth, wavering economic confidence, a substantially weaker oil price and anomalies in the foreign exchange market. The eleven-member committee elected to keep rates on hold.
“The naira remains the major point of concern. The dislocation between the official and interbank rates suggests that another devaluation might be in the offing if the oil price remains at current levels,” Rand Merchant Bank stated on Wednesday.
“In truth, the CBN cannot defend the value of the naira indefinitely. That said, we believe that the CBN might let sleeping dogs lie ahead of the presidential elections and alter its stance only at its March or May sittings,” the firm added.
An analyst said while they did not anticipate a change in tack, they believed the CBN would provide a more compelling argument regarding its exchange rate strategy.
“However, the Bank failed to quell market concerns in its post-MPC briefing, generating further financial market stress,” he said.
SOURCE: CAJ NEWS AGENCY