The monetary policy committee (MPC) takes place in Abuja on Monday and Tuesday, and judging by the intensity of recent reports, one could be forgiven for thinking that its only decision is whether to adjust its exchange-rate policy.
The Naira has been battered at the unofficial market, hovering around N290 - N300 per dollar, a good N100 above the fixed official price of N197 per dollar, as pegged by the CBN.
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. However, the CBN and MPC might not devalue as their preference is to deploy administrative measures.
One shouldn't also be surprised by some new measures as the committee may well want to assess the impact of its recent steps before announcing a devaluation or even introduce some new ones.
The benefits of a devaluation with or without a float can be overstated: it'll create a lift for (Nigeria’s marginal) non-oil exports and the FGN’s naira revenues from foreign trade taxes, perhaps some re-entry of unrecorded capital and the attainment of fair(er) value.
The increase in fx 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.
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