Bloomberg News

Nigeria’s Naira Weakens on Importer Demand as Bank Cuts Supply

November 07, 2012

Nigeria’s naira weakened against the dollar on importer demand for the U.S. currency after the central bank cut foreign exchange supply at auctions this week.

The currency of Africa’s biggest crude producer retreated 0.2 percent to 157.3 a dollar as of 4 p.m. in Lagos, the commercial capital. The naira has gained 3.2 percent this year, the second-best performance in Africa, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $50 million at an auction today, bringing sales this week to $79.9 million compared with $93.5 million last week, it said in an e-mailed statement. The regulator sells dollars at twice-weekly auctions on Mondays and Wednesdays to keep the naira within a 3 percent band around 155 per dollar.

The naira is likely to remain under pressure due to an “imbalance between dollar supply and demand,” Kunle Ezun and Kenneth Asenime, analysts at Ecobank Transnational Inc. in Lagos, wrote in an e-mailed note to clients today.

The central bank, led by Governor Lamido Sanusi, has left the benchmark interest rate unchanged at a record 12 percent this year, increased lenders’ reserve requirements and limited access to money auctions to stop dealers from buying foreign currency using naira purchased from the bank at a discount.

The yield on the nation’s 16.39 percent naira debt due January 2022 fell 11 basis points to 12.78 percent, according to today’s prices compiled by the Lagos-based Financial Markets Dealers Association. The yield on the country’s $500 million of Eurobonds due January 2021 slipped seven basis points to 4.321 percent today.

Ghana’s cedi depreciated less than 0.1 percent at 1.8811 a 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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