Feb. 13 (Bloomberg) -- Nigeria’s naira depreciated the most in two weeks against the dollar on speculation oil industry dollar sales will decline, putting the local currency under pressure.
The currency of Africa’s largest oil producer declined 0.2 percent to 159.11 per dollar as of 3:30 p.m. in Lagos, the commercial capital, headed for its biggest fall since Jan. 30, according to data compiled by Bloomberg.
Nigeria’s central bank offers foreign currency to lenders at twice-weekly auctions and the interbank market as it tries to keep the exchange rate around a midpoint of 155 naira to a dollar. The oil industry is the next major source of dollar supply to lenders, particularly around the month-end when companies exchange dollar earnings for naira to meet local obligations. The naira appreciated at the interbank foreign exchange market last week on the back of dollar sales by oil companies, analysts at Lagos-based Cowry Asset Management Ltd. said in a note to clients today.
“Traders are expecting a slowdown in oil industry dollar sales halfway in the new month, creating uncertainly on the supply side of the market,” Sewa Wusa, currency analyst at Lagos-based Sterling Capital, said by phone. The central bank may not be able to meet the additional demand, putting the naira under pressure, he said.
Nigeria sold $250 million at a foreign-currency auction today, the Abuja-based Central Bank of Nigeria said, without mentioning the amount demanded by lenders. Dollars were sold for between 156.50 naira and 156.92 naira each, with the marginal rate, which is also used as the prevailing exchange rate at 156.50 naira, unchanged from the previous sale on Feb. 8, it said in an e-mailed statement.
The central bank would like to keep the exchange rate stable after lowering its band against the dollar last year, Governor Lamido Sanusi said Jan. 31. The regulator kept its benchmark interest rate unchanged at a record high for a second consecutive meeting on Jan. 31, to curb inflation after the government partially removed fuel subsidies, boosting gasoline costs.
There may be increased demand for the dollar this week as there was only one auction last week because of a public holiday, Cowry Asset Management analysts said. The central bank will hold the second of its twice-weekly foreign currency auction on Feb. 15.
Ghana’s cedi was unchanged at 1.7084 per dollar as of 3.30 pm in Accra, the nation’s capital, according to data compiled by Bloomberg.
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