Bloomberg News

Naira Pares Gain as Central Bank Fails to Meet Dollar Demand

November 23, 2011

Nov. 23 (Bloomberg) -- Nigeria’s naira erased its first gain in three days against the dollar after the central bank failed to meet demand at a foreign-currency auction.

The currency of Africa’s biggest oil producer depreciated 0.2 percent to 159.55 per dollar in interbank trading at 3:07 p.m. in Lagos, its weakest since Oct. 27, as it retreated from a 0.2 percent gain earlier, according to data compiled by Bloomberg.

Nigeria sold $250 million at a foreign currency auction today, compared with $411.6 million demanded by lenders, the central bank said in an e-mailed statement. The marginal rate, which is also used as the prevailing exchange rate declined by 0.6 percent to 156.21 naira per dollar, its weakest since the Oct. 12 sale, compared with 155.21 naira at the previous auction on Nov. 21.

The central bank two days ago lowered the midpoint of its exchange rate band at the twice-weekly currency auctions to 155 naira per dollar from 150 naira, amid pressure from rising demand for imports and fears of weakening oil prices, the source of more than 95 percent of Nigeria’s foreign exchange income. This will allow the currency to trade in a range of 150 naira to 160 naira a dollar, it said.

Today’s decline “was due to reduced dollar supply at the auction,” analysts at Lagos-based Diamond Bank Plc said today in an e-mailed note. With a widening gap between demand and supply, the naira is seen as “under pressure except when the central bank intervenes,” they said.

Ghana’s cedi slipped to the weakest level in more than a month, losing 0.4 percent to 1.6320 per dollar at 2:49 p.m. in Accra, the capital.

--Editors: Dulue Mbachu, Linda Shen

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

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


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