Bloomberg News

Nigeria Naira Depreciates Most in a Month After Inflation Rises

July 18, 2012

Nigeria’s naira depreciated the most in almost a month after inflation accelerated.

The currency of Africa’s biggest oil producer retreated as much as 1.4 percent, the biggest intraday decline since June 22, to 162.500 per dollar and traded 0.4 weaker at 160.8 as of 2:25 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

The inflation rate rose to 12.9 percent in June, from 12.7 percent in May, the Abuja-based National Bureau of Statistics said today in an e-mailed statement. The Central Bank of Nigeria held the benchmark interest rate at a record-high 12 percent this year to curb the naira’s decline and combat inflation, after raising it 5.75 percentage points in 2011.

“The depreciation is in reaction to the higher inflation environment which has a tendency to slow inflows and put naira under pressure,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said in a telephone interview today. “The increase in inflation may induce the central bank to raise the benchmark rate.”

Nigeria sold $300 million at a foreign-currency auction today, the most since July 2, at 155.87 per dollar, the Abuja- based central bank said in an e-mailed statement.

The yield on Nigeria’s 7-year domestic bonds due June 2019 fell seven basis points to 16.12 percent, according to the July 17 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 slid seven basis points to 5.425 percent today.

Ghana’s cedi was unchanged at 1.9550 per dollar in Accra.

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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