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The naira weakened against the dollar, paring its first weekly advance in seven as oil, Nigeria’s key export, slid amid signals of a fall in demand on reports showing the global economic slowdown is deepening.
The currency of Africa’s biggest oil producer depreciated 0.3 percent to 162.615 per dollar as of 2:30 p.m. in Lagos, the commercial capital. The naira has strengthened 0.5 percent this week, according to data compiled by Bloomberg.
Nigerian benchmark Bonny Light crude retreated for a sixth straight day to $89.71 a barrel, a 30 percent fall from its March peak this year. Oil in New York tumbled below $80 a barrel and Brent crude fell under $90 a barrel yesterday as reports added to concern that demand will slow amid rising supplies.
As Bonny Light declines “the market could be excused for showing some nerves,” Gregory Kronsten and Olubunmi Asaolu, strategists at FBN Capital Ltd. in London, wrote in an e-mailed note today.
German business confidence fell to a two-year low, the Munich-based Ifo institute said today after data yesterday showed that U.S. manufacturing shrank and home sales declined. Moody’s Investors Service cut ratings for Credit Suisse Group AG and 14 other banks, while the International Monetary Fund said Europe’s crisis has reached a “critical stage.”
The Central Bank of Nigeria sold $750 million at two foreign-currency auctions this week, the most since the five days to Oct. 12. The Abuja-based regulator, which is the biggest supplier of dollars to the market, sells on Mondays and Wednesdays to support the naira.
Nigeria’s inflation rate fell to 12.7 percent in May from 12.9 percent in April, the National Bureau of Statistics said June 19, staying above the central bank’s target and adding to investor expectations interest rates will remain unchanged at a record high of 12 percent.
The yield on Nigeria’s domestic bonds due 2019 rose three basis points, or 0.03 percentage point, to 15.63 percent, according to the June 21 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 fell one basis point to 5.57 percent.
Ghana’s cedi weakened 0.3 percent to 1.9325 per dollar in Accra, the capital.
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