LAGOS: ANALYSTS believe the upcoming general elections played a part in the Central Bank of Nigeria retaining the value of the Naira amid pressure the United States currency.
The elections, projected to be the fiercest in recent memory, are scheduled for next month. On Tuesday, CBN Governor, Godwin Emefiele ruled out the possibility of floating the Naira as it would cause a significant depreciation of the local unit, and in turn affect the purchasing power of the consumer.
The naira posted an all-time high of US$/N192, 10 on the day despite sustained intervention by the CBN and a 0, 4 increase in commercial banks’ foreign currency position limits.
An analyst said the disparities between the official and interbank rates suggest that another devaluation might be in the offing if the oil price remains at current levels. “The CBN cannot defend the value of the Naira indefinitely,” the market watcher said.
Rand Merchant Bank (RMB), the international thinktank, said authorities would be compelled to shift the Naira’s mid-point from US$/N168 to a 205,9 to achieve its budget revenue in 2015, assuming production levels of 2,1m barrels per day and an optimistic oil price of US$70/barrel.
“That said, we believe the CBN might let sleeping dogs lie ahead of the presidential elections and alter its stance only at its March or May MPC sittings. Abandoning the peg would also be ill-timed due to the extent of portfolio outflows,” RMB stated.
SOURCE: CAJ News Agency