Bloomberg News

Naira Weakens Most in 2 Weeks as Lower Oil Offsets Dollar Supply

June 20, 2012

The naira fell for the first time in three days, heading for the biggest retreat in almost two weeks, as declining oil prices outweighed increased dollar supply from the central bank and oil companies.

The currency of Africa’s biggest oil producer depreciated 0.3 percent to 162.12 per dollar as of 3 p.m. in Lagos, the commercial capital, the most on a closing basis since June 7.

Nigeria’s bonny light crude declined for a fourth day, down 0.6 percent to $96.33 a barrel from $128.47 a barrel on March 13. Foreign-currency reserves, which rose 13 percent this year, slipped to $37.277 billion, according to the latest data from central bank dated June 18.

“Continued drop in the price of oil will affect external reserves and the ability of the central bank to support the naira,” Sewa Wusu, a currency analyst at Lagos-based Sterling Capital Ltd., said by phone today.

The Central Bank of Nigeria sold $350 million at a foreign- currency auction today at 155.90 naira per dollar, the Abuja- based bank said in an e-mailed statement. The regulator sold $400 million at an auction on June 18, matching the amount sold on June 13, which was the most since Feb. 8.

Brent crude slid for a third day, declining 0.4 percent to $95.37 per barrel after a report yesterday showed U.S. stockpiles fell 550,000 barrels last week. Investors are awaiting the outcome of a U.S. Federal Reserve monetary policy meeting today.

‘Global Sentiment’

“The naira current weakness is based on global sentiment affecting the oil price,” Olivier Vojetta, the London-based head of research at FM Capital Partners Ltd., wrote in an e- mailed note today. The naira rebounded recently as “the government continued to intervene in the market to stabilize the currency which has seen the first fall in reserves since March,” Vojetta said.

The naira strengthened 0.9 percent from June 15 to June 18, according to data compiled by Bloomberg.

Nigerian National Petroleum Corp. sold about $400 million in the interbank market yesterday, according to an e-mailed note from Access Bank Plc (ACCESS)’s treasury group.

The nation’s inflation rate fell to 12.7 percent in May from 12.9 percent in April, the National Bureau of Statistics said yesterday, staying above the central bank’s target and adding to expectations interest rates will remain unchanged at a record high of 12 percent.

The yield on Nigeria’s domestic bonds due 2019 fell 2 basis points to 15.59 percent, according to the June 19 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 fell 10 basis points to 5.558 percent.

Ghana’s cedi was unchanged at 1.9275 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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