Nigeria Sells $300 Million at Auction; Naira Weakens on Dollar Shortfall
Nigeria sold $300 million at a foreign-exchange auction today, less than the $332.8 million demanded by lenders, according to the Abuja-based Central Bank of Nigeria.
Dollars were sold for between 153.31 naira and 153.71 naira each, the bank said on its website today. The marginal rate, which is also used as the prevailing exchange rate, was 153.38 naira compared with 153.18 naira at its previous auction held on May 9.
It was the fourth successive auction at which the central bank was unable to meet demand by lenders on behalf of their customers. The naira weakened 0.5 percent to 157.05 to a dollar today in the interbank market from 156.25 naira yesterday.
Nigeria’s central bank has been defending the currency of Africa’s top oil producer, attempting to keep it within a 3 percentage point band above or below 150 per dollar at the central bank’s twice-weekly auctions, in a bid to curb inflation. The marginal rate at today’s foreign-exchange auction represented a 2.4 percent devaluation from the target 150 naira rate.
“It is the demand that is not met at the central bank auction that is putting pressure on the interbank market,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co., a brokerage, said by phone today. Increased foreign exchange supply by the central bank at the next auction next week may ease the pressure on the interbank market, he said.
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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