Nigeria's central bank kept its benchmark interest rate at 11 percent on Tuesday and left the naira exchange rate fixed despite a dive on the parallel market and complaints from businesses struggling to get dollars for imports, Reuters reports.
Central Bank Governor Godwin Emefiele said the 12 members of the bank's Monetary Policy Committee voted unanimously to keep the rate unchanged. It also held the cash reserve ratio for commercial banks at 20 percent.
Emefiele said there had been no changes to the official naira rate to the dollar which has come under tremendous pressure due to a drying up of vital oil revenues,
"Investors will likely remain on the sidelines, given the perceived overvaluation of the FX rate and the still-significant risk of an eventual devaluation," said Razia Khan, head of Africa research at Standard Chartered.
Nigeria's three-month dollar/naira non-deliverable currency forwards fell over 7 percent.
President Muhammadu Buhari raised speculation of a devaluation when he said in December there would be some flexibility with the naira rate.
But Emefiele said the committee "reiterated its unyielding commitment towards achieving a stable exchange rate regime to ensure more flexibility for sustainable inclusive economic growth in the medium to long term."
As commercial banks have run out of dollars, firms have been forced to go to the parallel market where a dollar fetches 305 naira in contrast to the official rate of around 197.
In turn, firms have been firing staff to offset the premium they pay to get dollars. In the absence of large non-oil industries, Nigeria needs to import a wide range of goods from milk, machinery to wheat.
Adding further woes, rising unemployment and inflation hitting 9.6 percent in December - a three-year-high - has dried up consumer demand.
When asked whether there would be a devaluation Emefiele only told reporters: "The only answer I can give is that we are already working on different scenarios ... under different crude prices." He did not elaborate.
Investors have seen a devaluation for Africa's largest economy as long overdue, but Nigeria's central bank has so far opted to restrict dollar supplies rather than moving its currency peg, which currently stands at 197 naira to the dollar.
Emefiele also defended controversial forex restrictions on importers covering hundreds of goods aimed at preserving dwindling dollar reserves. He said sales for locally produced food such as fish had risen. "It has been positive," he said.
He painted a much more positive picture of the economy than many in Nigeria's business community.
"There is wide room for optimism about the medium to long term macro-economic prospects... especially given the clarity in the policy direction of the administration, the various interventions in the real sector, gradual improvements in the power sector and the reinvigorated fight against corruption."
Alan Cameron, economist at Exotix in London, said Nigeria would not run out of reserves any time soon.
"But the question is how much of a spread between official and parallel exchange rates will they tolerate," he said.