Bloomberg News

Naira Strengthens First Day on Four, Pares Third Weekly Decline

December 09, 2011

Dec. 9 (Bloomberg) -- Nigeria’s naira rebounded, snapping three days of declines, paring its third consecutive weekly retreat on speculation the central bank sold dollars.

The currency of Africa’s biggest oil producer gained 0.2 percent to 161.765 per dollar on the interbank market as of 3 p.m. in Lagos, after falling as much as 0.7 percent, according to data compiled by Bloomberg. The advance trimmed this week’s decline to 0.2 percent.

The naira fell 2.2 percent to a seven-week low yesterday after the Central Bank of Nigeria on Nov. 21 lowered the midpoint of its exchange-rate band to 155 naira per dollar from 150 naira. The bank sold foreign exchange in the market today, Access Bank Plc’s treasury group said by e-mail. Mohammed Abdullahi, a spokesman for the Abuja-based based central bank, didn’t respond to an e-mailed request for comment.

“It is very probable that the currently strong foreign exchange demand partly stems from festive season demand,” Yvonne Mhango, a Johannesburg-based sub-Saharan Africa economist at Renaissance Capital, wrote in an e-mailed note.

Rising imports and weakening oil prices, the source of more than 95 percent of Nigeria’s foreign-exchange income, mounted pressure on the bank to lower the target exchange rate.

Imports into sub-Saharan Africa’s second-largest economy jumped 91 percent to 9.3 trillion naira ($57 billion) in the January to September period from a year earlier, according to a statement published Dec. 7 on the website of Abuja-based National Bureau of Statistics. The central bank sold $200 million at a twice-weekly foreign-currency auction Dec. 7, less than the $245 million asked by lenders. The last time lenders’ demand was met was Nov. 30.

Ghana’s cedi fell for a second day, slipping 0.3 percent to 1.6452 per dollar as of 2:06 p.m. in Accra, according to data compiled by Bloomberg.

--Editors: Stephen Kirkland, Linda Shen

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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