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Nigeria’s central bank may soon requite bond and stock investors what they have been pleading for: a weaker naira.

Governor Godwin Emefiele appear after a meeting of the Monetary Policy Committee in Abuja, the capital letter, on Tuesday that a more than flexible foreign-substitution system would exist unveiled “in the coming days.” Merely he gave scant item and left enough of questions. Here are some answers:

What’s the problem?

Nigeria has held the naira at 197-199 per dollar since March 2015, fifty-fifty as other oil exporters from Russian federation to Republic of colombia and Malaysia let their currencies drop among the slump in crude prices since mid-2014. Foreign reserves dwindled as the central depository financial institution dedicated the peg, while foreign investors, fearing a devaluation, sold Nigerian stocks and bonds.

While President Muhammadu Buhari and Emefiele argued a devaluation would fuel inflation, that happened anyway: consumer prices accelerated at the fastest pace in six years in Apr as the black-market naira rate plummeted. To make matters worse, data released iv days before the MPC meeting showed the economy contracted in the showtime quarter for the commencement time since 2004 equally the dollar shortage curtailed manufacturing. That probably surprised policy makers, prompting the change of heart, according to Mathias Althoff, a fund manager at Tundra Fonder AB, which has about $200 million invested in frontier market stocks, including Nigerian banks.

What happens next?

While Emefiele didn’t specify what he meant by “greater flexibility,” analysts at Renaissance Capital Ltd. believe the primal bank will classify dollars at a fixed charge per unit to strategic industries — like energy and agriculture — while letting the naira weaken in the interbank market, where everyone else would purchase their foreign currency. The central bank may besides attempt try to control the new interbank charge per unit by imposing a trading band of about 5 or 10 percent around it, according to Althoff.

Volition that satisfy investors and salve the economy?

If the primal bank doesn’t permit the naira to drop enough, strange investors will proceed to shun Nigerian assets, according to Althoff. The currency should trade at around 285-290 per dollar, according to Alan Cameron, an economist at Exotix Partners LLP. A devaluation won’t solve Nigeria’s structural economic problems — which include an over-reliance on oil exports — and may fuel inflation in the short term. Just information technology would make Nigerian exports more competitive, curb imports and encourage strange investment.

What are the pitfalls?

Most investors would prefer a fully-floating naira, nonetheless doubt that Nigeria, which has always had currency controls of some sort, will take that choice. And in that location are concerns information technology will be impossible for the key bank to ensure that merely importers meeting its criteria will exist able to purchase foreign-substitution at the discounted official charge per unit. Many analysts fear that in a nation U.G. Prime Minister David Cameron described as “fantastically corrupt,” access to the official charge per unit will come down to political connections.

“The suggestion of a dual commutation rate, with the maintenance of the official window, is a concern,” Razia Khan, caput of African research at Standard Chartered Plc, said. “This might lead to continued distortions in the marketplace, ultimately with force per unit area on foreign-commutation reserves.”

What else should investors lookout man out for?

Buhari. He has fabricated information technology clear that he, not Emefiele, is the person in charge of exchange-rate policy. The president is loath to allow the currency to drop unless he’s forced to and in February likened such a move to “murder.” He has yet to make whatever response to the MPC’south proclamation. And while he is due to make a speech communication on May 29, the first anniversary of his coming to power, local press reports advise he will focus on the government’due south fight confronting abuse and Boko Haram’south Islamist insurgency.

The central bank has hinted at change before, but to do nothing. “The MPC has dangled the carrot of substitution rate reform, but without giving whatever details of what a reformed market would look like,” Cameron at Exotix said. “To the skeptics among united states, this volition simply sound like a re-hash of the same old fabric we’ve been hearing nigh since December 2015.”