Abuja - Calls for devaluation have heightened ahead of the Central Bank of Nigeria’s next meeting of the Monetary Policy Committee (MPC).
The committee meets in Abuja on Monday and Tuesday.
“Judging by the intensity of the media commentary, we could be forgiven for thinking that its only decision is whether to adjust its exchange-rate policy,” said First Bank of Nigeria (FBN) Capital said.
The think-tank said the depletion of official reserves, the slide in the oil price and the intermittent global market turmoil emanating from China and elsewhere could make a good case for devaluation.
“We are not so sure. The preference of the CBN and the MPC is to deploy administrative measures,” FBN Capital said.
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However, the financial firm would not be surprised by some new measures.
“In any event, the committee may well want to assess the impact of its recent steps before announcing devaluation (or even introducing some new ones).”
FBN said the benefits of devaluation, with or without a float, could be overstated.
“The increase in fx (foreign exchange) availability would not be huge. The authorities could look at exchange rates post-devaluation in Russia, Azerbaijan and elsewhere, and maintain their policy as its stands.”
N1 is presently equivalent to US$0,005.
- CAJ News