Naira Falls to 2 Month-Low as Central Bank Fails to Meet Demand

Nigeria’s naira depreciated against the dollar, declining to the lowest in two months, after the central bank failed to meet demand at foreign-currency auctions.

The currency of Africa’s biggest oil producer weakened 0.1 percent to 162.35 per dollar in interbank trading at 3:50 p.m. in Lagos, its lowest since Oct. 17 on a closing basis, according to data compiled by Bloomberg.

Nigeria sold $200 million at a foreign-currency auction yesterday, less than the $248.6 million demanded by lenders, with the marginal rate, which is also used as the prevailing exchange rate, unchanged from the previous auction on Dec. 7, the Abuja-based Central Bank of Nigeria said in an e-mailed statement. The last time lenders’ demand was met was Nov. 30.

The central bank on Nov. 21 lowered the midpoint of its exchange-rate band at the auctions to 155 naira per dollar from 150 naira as rising imports and weakening oil prices increased pressure on the currency. Sub-Saharan Africa’s second-biggest economy depends on oil exports for more than 95 percent of foreign income, according to the Finance Ministry.

Dollar demand has exceeded the supply, “as at the central bank auctions last week demand for US dollars was $474million, London- based CSL Stockbrokers Limited said in e-mailed note to clients today. “We believe that in time the naira will find a new official rate of around 172.5 naira to the dollar, down from the current official rate of N155 per dollar.”

Nigeria’s government will reduce spending to cut the fiscal deficit to 2.8 percent of gross domestic product in 2012 from 3 percent this year, in a bid to help sustain growth in the West African nation, President Goodluck Jonathan told lawmakers in the capital, Abuja, today. Expenditure will increase 6 percent to 4.8 trillion naira in 2012.

Ghana’s cedi was unchanged at 1.6455 per dollar as of 3:50 p.m. in Accra, the nation’s 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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