Bloomberg News

Nigeria’s Naira Declines to 4-Day Low as Banks Demand Dollars

July 14, 2011

July 14 (Bloomberg) -- Nigeria’s naira weakened to a four- day low against the dollar after the central bank was unable to meet demand from lenders for the U.S. currency at an auction yesterday.

The currency of sub-Saharan Africa’s second-biggest economy depreciated as much as 3.1 percent to 156.95 per dollar in the interbank market, the biggest intraday decline since Jan. 2009, and traded down 0.03 percent at 152.25 by 4:30 p.m. in Lagos, according to data compiled by Bloomberg.

The central bank sold $250 million yesterday, less than the $410 million demanded by lenders, which was the biggest amount sought since the June 27 sale.

“Dealers expect the naira to depreciate slightly at the interbank market today due to the surge in demand for foreign exchange by the end users,” Lagos-based Diamond Bank Plc analysts wrote in an e-mailed note.

The central bank of Africa’s largest oil producer has been using foreign-currency reserves to keep the naira within a 3 percentage-point band above or below 150 per dollar at its twice-weekly auctions.

Foreign-currency reserves stood at $31.7 billion by July 4 compared with $37 billion a year earlier, according to central- bank data.

The inability of the central bank to meet demand “is causing scarcity of dollars, with the naira depreciating to 165 per dollar at the black market,” Abubakar Mohammed, the managing director of Forward Marketing Communication Bureau de Change, based in Lagos, said in an e-mailed statement.

--Editors: John Kohut, Antony Sguazzin.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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