Bloomberg News

Nigeria’s Naira Weakens Most in Two Months on Fuel Import Demand

March 12, 2012

Nigeria’s naira weakened the most in two months against the dollar on higher demand for the U.S. currency as the state oil company and independent dealers made gasoline import orders.

The currency of Africa’s largest oil producer retreated 0.6 percent to 158.225 per dollar as of 3:55 p.m. in Lagos, the commercial capital, the biggest decline since Jan. 6, according to data compiled by Bloomberg. Nigeria sold $150 million at a foreign-currency auction today, with lenders buying the entire amount on offer, the Abuja-based Central Bank of Nigeria said in an e-mailed statement.

“In the current week, we expect demand pressure in the market,” as the state oil company and refined petroleum products importers “place orders to avert an impending fuel scarcity,” Lagos-based Cowry Asset Management Ltd., said in an e-mailed note to clients today.

President Goodluck Jonathan’s attempt in January to scrap gasoline subsidies sparked a week-long general strike and prompted parliamentary investigation into the spending. The government is probably paying more than 2 trillion naira ($12.6 billion) to fuel importers to cover the difference between market costs and state-regulated prices for last year, said Farouk Lawan, chairman of a committee investigating the discrepancies. The probe caused a drop in demand for foreign currency to fund fuel imports, central bank Deputy Governor Tunde Lemo said Feb. 7.

Fuel Tenders

Fuel retailers have resumed imports after a government assurance they will receive refunds for selling at subsidized prices, the state-owned Nigerian National Petroleum Corp. said on Feb. 23. Nigeria is revising its 2012 budget to include 888 billion naira in fuel subsidies as the spending plans put to lawmakers in December did not make provision for subsidy, the Finance Ministry said in a statement on Feb. 16.

The West African country, which relies on imports to meet 70 percent of its fuel needs because of inadequate refining capacity, approved a tender for 3.57 million metric tons of gasoline imports by 42 fuel retailers for the second quarter, Reginald Stanley, executive secretary of the Petroleum Products Pricing Regulatory Agency, said today in a statement published in the Abuja-based Daily Trust newspaper.

Ghana’s cedi appreciated less than 0.1 percent to 1.7180 per dollar, as of 3:55 p.m. in Accra, the nation’s capital.

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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