Bloomberg News

Nigeria’s Naira Weakens First Day in Three on Dollar Demand

October 26, 2011

Oct. 26 (Bloomberg) -- Nigeria’s naira weakened for the first day in three on rising dollar demand in currency trading among banks, after the central bank restricted buyers at its twice-weekly auctions.

The currency of Africa’s biggest oil producer depreciated 2.7 percent to 159.87 naira per dollar in interbank trading at 4:55 p.m. in Lagos, the lowest level since Oct. 21, according to data compiled by Bloomberg. The central bank sold $345 million at auction today, $5 million less than it put on offer, at 150.05 naira per dollar and 0.03 percent less than at the last sale on Oct. 24. It was the second time offers exceeded demand this month after the bank introduced rules that reduced the number of eligible buyers.

“There is a lot of demand for dollars at the interbank market from customers banned from the central bank auction,” Babatunde Obaniyi, an analyst with Greenwhich Trust Ltd., a Lagos- based investment company, said today by phone. “Although the central bank supplied more dollars than was demanded at its auction, the restrictions in the market continue to put the naira under pressure.”

The central bank on Oct. 14 banned companies that export crude oil from buying dollars at its foreign-currency auctions in an attempt to curb mounting demand and to stabilize the naira. Foreign companies seeking to repatriate dividends and capital were asked to use their own funds or sources other than the bank’s auctions.

--Editors: Dulue Mbachu, Vernon Wessels.

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

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net


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