Nigeria’s Naira Strengthens Most in a Week on Currency Auction
January 18, 2012, 10:15 AM ESTBy Chris Kay and Emele Onu
Jan. 18 (Bloomberg) -- Nigeria’s naira strengthened the most against the dollar in more than a week as the central bank held its first foreign-currency auction since bankers returned to work after a general strike was suspended.
The currency of Africa’s biggest oil producer advanced 0.8 percent to 161.43 per dollar on the interbank market by 3:32 p.m. in Lagos, the commercial capital. That’s the biggest gain since Jan. 9, according to data compiled by Bloomberg.
Nigeria sold $250 million at a foreign-currency auction today, the entire amount on offer, the Abuja-based Central Bank of Nigeria said. Dollars were sold for between 156.71 naira to 157.10 naira each. The marginal rate, which is also used as the prevailing exchange rate, weakened 0.1 percent to 156.85 naira, compared with the previous auction on Jan. 16, it said.
The West African nation’s labor unions suspended strikes and protests Jan. 16 after President Goodluck Jonathan limited gasoline-price increases to 97 naira ($0.60) a liter (0.3 gallon). The strike, which sparked street protests, shut banks, businesses and ports, began Jan. 9 after the government scrapped subsidies, which it said cost 1.2 trillion naira last year, and vowed to spend the savings on power plants and roads. Gasoline prices had more than doubled from 65 naira a liter.
The auction today should satisfy some pent-up dollar demand, Adedayo Idowu, an analyst at Lagos-based Vetiva Capital Management Ltd., said by phone today. “We expect things will stabilize” after the strikes, she said.
‘Counter Productive’
Central bank Governor Lamido Sanusi said Jan. 16 that it may be “counter productive” to raise interest rates in response to a jump in fuel prices that will probably push up inflation.
Nigeria’s consumer inflation rate fell for the first time in four months to 10.3 percent in December, from 10.5 percent a month earlier, the National Bureau of Statistics said today in Abuja, the capital.
The central bank left the benchmark lending rate unchanged at a record-high 12 percent when it last met on Nov. 21. It increased the rate 2.75 percentage points in October after inflation climbed above the bank’s 10 percent target.
“The CBN is committed to exchange rate stability since a sizeable depreciation would not improve external competitiveness and result in a spike in imported inflation,” Standard Bank Group Ltd. strategists, led by Stephen Bailey-Smith in London, wrote in a report today. “We expect dollar-naira to fluctuate around 160 in the foreseeable future assuming the oil price remains relatively robust.”
Ghana’s cedi fell 0.9 percent to 1.7450 per dollar, as of 2:36 p.m. in Accra, the capital, according to data compiled by Bloomberg.
--Editors: Linda Shen, Alex Nicholson
Emele Onu in Lagos at eonu1@bloomberg.net
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
