The naira fell and headed toward its lowest close against the dollar in more than a week as businesses started resuming for the year and the central bank sold the fewest dollars in more than three years.
The currency of Africa’s biggest oil producer weakened 0.3 percent to 156.88 a dollar as of 11:23 a.m. in Lagos, the commercial capital, heading for its lowest close since Jan. 7. The naira gained 3.9 percent last year, the strongest performance of African currencies tracked by Bloomberg.
“Nigeria has a hearty appetite for imported goods and services,” FBN Capital strategists led by Gregory Kronsten in London wrote in a report today, who forecast the naira would reach 159 a dollar by the end of the year. “This demand is relatively constant while the supply of foreign exchange clearly hinges on oil and gas export revenues.”
Businesses close during religious festivities in Nigeria, a nation of more than 160 million people with a population almost evenly split between Muslims and Christians. The Central Bank of Nigeria, which sells dollars to lenders to stabilize the naira, resumed twice-weekly foreign-currency auctions Jan. 7 after halting them on Dec. 19. It sold $11.8 million yesterday, the lowest since June 2009.
The naira wasn’t put under usual pressure last week “due to reduced business activities early in the year,” Ecobank Transnational analysts, led by Paul-Harry Aithnard in Paris, wrote in an e-mailed note today. Going forward “the naira will continue to be affected by strong import demand.”
Yields on 10-year naira debt were unchanged at 11.31 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined two basis points to 3.769 percent today.
Ghana’s cedi weakened for a fourth day by 0.1 percent to 1.9055 a dollar in Accra, the capital.
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