Bloomberg News

Naira Weakens to Two-Month Low on Bets of Low Dollar Supply

February 25, 2013

Nigeria’s naira depreciated to its lowest in more than two months on speculation the central bank won’t sell enough dollars to meet demand at auctions this week.

The currency of Africa’s biggest oil producer depreciated 0.2 percent to 157.70 per dollar as of 3:02 p.m. in Lagos, its weakest on a closing basis since Dec. 19, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $150 million at an auction today, with lenders buying the entire amount on sale, it said in e-mailed statement. The regulator sold $240 million at its two auctions last week, the lowest in five weeks. The naira gained as much as 0.2 percent on Feb. 22 after an oil company was said to sell $100 million. Oil producers, which sell dollars periodically to meet local spending needs, are the second major supplier after the central bank.

“Dollar demand increased as dealers speculate the oil industry finished sales of the U.S currency and the central bank won’t supply enough to meet demand at interbank trading,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone today. “Dealers needed more than was supplied at today’s auction.”

The central bank held the benchmark interest rate at a record high 12 percent for an eighth straight time on Jan. 21 to control inflation and stabilize the naira.

The yield on the country’s 16.39 percent domestic bonds due January 2022 rose eight basis points to 10.56 percent, according to Feb. 22 data compiled on the Financial Markets Dealers Association website.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell six basis points to 4.374 percent today.

Ghana’s cedi depreciated for the sixth day by 0.1 percent to 1.9150 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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