Bloomberg News

Naira Retreats as Oil Companies Sell Less Dollars Than Expected

June 01, 2012

Nigeria’s naira declined, reversing earlier gains, as oil companies were said to sell fewer dollars in the market than expected.

The currency of Africa’s biggest oil producer depreciated 0.5 percent to 160.585 per dollar as of 5 p.m. in Lagos, the commercial capital, giving it a weekly decline of 0.3 percent.

“Expectations of dollar sales today by oil companies, as part of their month-end supply did not materialize, thereby causing a fall in naira,” Sewa Wusu, currency analyst at Lagos- based Sterling Capital Ltd., said by phone today. “Only one or two oil companies sold dollars this week.”

The Central Bank of Nigeria offers dollars at auctions on Mondays and Wednesdays and through interbank trading to maintain exchange-rate stability. The oil industry is the second major source of dollar supplies in the country. The central bank sold $500 million at its auctions this week, the highest since Feb. 15, according to data on its website.

“The central bank supply alone couldn’t meet dollar demand after some foreigners exited the market spurred by the euro zone crisis,” Wusu said.

Ghana’s cedi gained less than 0.1 percent to 1.8927 per dollar, in Accra, the 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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