Bloomberg News

Nigeria Strikes Halt Interbank Naira Market as Banks Curb Trades

January 09, 2012

Jan. 9 (Bloomberg) -- Naira trading ground to a halt on Nigeria’s interbank market as unions started a nationwide strike to protest an increase in gasoline costs, which are more than doubling, according to the Central Bank of Nigeria.

The currency of Africa’s biggest oil producer was less than 0.1 percent weaker at 162.1 per dollar as of 6:31 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

“No bank has appeared and so there is no activity going on right now,” Mohammed Abdullahi, a spokesman for the Abuja-based central bank, said by text message today. “The interbank market is not officially closed.”

The Nigerian Labour Congress and Trade Union Congress, representing more than 8 million workers, called an indefinite strike to force President Goodluck Jonathan to reverse a decision to scrap fuel subsidies. Banks, businesses, schools and most offices were shuttered and streets deserted except for protesters today in Lagos and Abuja, the capital. Protest marches are also planned in major cities across the country, union officials said.

The naira interbank market is unofficially shut today as a “precautionary measure” owing to the general strike, Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today.

The central bank sold $250 million at a foreign-currency auction today. Dollars were sold for 156.51 naira to 157.36 naira each, the bank said in an e-mailed statement, without mentioning the amount demanded by lenders. The marginal rate, which is also used as the prevailing exchange rate, was 156.83 naira, compared with 156.71 naira at the previous auction on Jan. 4, it said.

Limited Services

Nigerian lenders, including Diamond Bank Plc and Standard Chartered Plc, will run limited branch services from today, according to officials at the companies.

“There has been significant civil protest against the Federal Government’s decision so today’s strike is likely to cause meaningful disruption to economic activity,” Leon Myburgh and Coura Fall, Johannesburg-based Africa strategists at Citigroup Inc., wrote in an e-mailed note to clients today. The strike is “weighing” on the naira, they said.

The Nigerian Stock Exchange All-Share Index climbed 0.4 percent to 20,802.33 at the close in Lagos, according to an e- mailed statement from the bourse. The value of transactions fell today to 585 million naira ($3.6 million), 20 percent of the daily average since this year, according to the website of the bourse.

“Not much is happening as a lot of traders could not go to the trading floor today,” Akinbamidele Akintola, a research analyst with Lagos-based Renaissance Capital, said by phone. “Many of the traders are trading from their offices.”

Ghana’s cedi fell for a second day, declining 0.1 percent to 1.66 per dollar.

--Editors: Dulue Mbachu, Peter Branton

To contact the reporters on this story: Chris Kay in Abuja at ckay5@bloomberg.net; Vincent Nwanma in Lagos at vnwanma@bloomberg.net; 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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