Nigeria’s naira weakened for the first time in three days against the dollar on speculation that the central bank may lower its targeted trading range for the currency after a monetary policy meeting today.
The naira depreciated as much as 0.9 percent, before trading 0.3 percent lower at 158.95 per dollar in the interbank market by 3:04 p.m. in Lagos, its weakest since Oct. 31 on a closing basis, according to data compiled by Bloomberg.
The central bank sold $250 million, less than $419.2 million demanded by lenders at a twice-weekly currency auction. The marginal rate, which is also used as the prevailing exchange rate, declined by 0.5 percent to 155.21 naira, compared with 154.50 naira at the previous auction on Nov. 16, the Abuja-based bank said. Policy makers may lower the official exchange rate to 155-156 per dollar as demand for imports increases and to defend against declines in the price of oil, central bank Governor Lamido Sanusi said Oct. 31.
“The bank could adopt greater exchange-rate flexibility, thereby lowering its official target for the naira to a 4 percentage-point band above or below 150 per dollar,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co. Ltd., said by e-mail. “The central bank could also adopt a one-time devaluation without changing the current band.”
Sanusi is scheduled to announce monetary policy decisions at a press conference at 4:30 p.m. local time.
The central bank currently aims to keep the naira within a 3 percentage-point band above or below 150 per dollar at its twice-weekly auctions. Oil fell 0.8 percent to $96.89 a barrel in New York, the lowest on a closing basis since Nov. 9. Nigeria is Africa’s largest oil producer.
Policy makers will probably raise the policy rate by half a percentage point, the seventh increase this year, to 12.5 percent, according to the median estimate of seven economists surveyed by Bloomberg.
Ghana’s cedi slipped to the weakest level in a month, losing 0.9 percent to 1.63 per dollar.
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