RESPITE may still be far for the nation's economy as the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, said the current Monetary Policy Rate would be raised further with 2015 election spending on the corner.Sanusi, who gave the indication in an interview with CNBC Africa, noted that if government spendings were not curtailed, especially with the elections in 2015, the benefits of the expenditure curbs by the Minister of Finance would be fruitless and CBN may raise the benchmark interest rate.However, Nigerian currency fell slightly Monday, on dollar demand from fuel importers and foreign investors repatriating dividends, despite oil firms selling the U.S. currency.Demand for the U.S. dollar has surged in the last three weeks, exerting pressure on the Naira, as fuel importers and investors repatriating their dividends snap up any available hard currency.The unit closed at N158.28 to the dollar at the interbank, compared with Friday's close of N158.20 to the green back.The sliding profile was recorded despite the sale of $28.8 million by Nigerian units of Chevron, $23 million by Italian oil firm- Eni and $13 million by Chinese-owned Addax, to some lenders, dealers said.The central bank auctioned $350 million at 155.74 to the dollar on its foreign currency auction yesterday, as against $371.7 million it sold at the same rate at Wednesday's auction. The bank doesn't provide data on dollar demand at its auctions.Dealers expect the Naira to trade at the 158-level this week, as more oil firms sell their dollars to the banks in order to fund their domestic obligation in local currency.Sanusi said: Frankly, if you look at what's happening in Nigeria, the election has already started, one way or the other. Finance Minister Ngozi Okonjo-Iweala has curbed expenditure, but there will be probably more tightening if the politicians spend money.'The interest rate benchmark, currently at 12 per cent have been subject of controversy in the nation's economic discourse, just as the apex bank left its policy rate unchanged at a record high of 12 percent for the 10th consecutive meeting on May 21.There were concerns that spending is poised to rise as the government battles Islamist insurgents in the Northeast, while opposition parties have approved plans to merge into an alliance to challenge the ruling party.Presently, Nigeria' inflation rate accelerated to 9.1 percent in April from 8.6 percent in the previous month, according to the National Bureau of Statistics, but has stayed under 10 per cent for four consecutive months, meeting the central bank's target.Meanwhile, Sanusi has indicated that Nigeria may not accept all requirements of the Basel II and Basel III accords for banking regulation.According to him, while both accords have have strong points for regulating bank reserves, some of the quantitative elements, may go contrary to the expectations of the country.He noted that a situation where banks are effectively allowed to run any kind of models and to calculate their own risk and capital, may fall short of what is needed. 'There still has to be some element of Basel I as far as that is concerned.'Rules from the Basel Committee on Banking Supervision requiring banks to hold enough capital to survive market turmoil without causing risk to the financial system, also known as Basel III, is expected to come into effect in the next five years.
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