Naira Weakens as Dollar Demand Piles Up, Marginal Rate Declines
The naira weakened for the first time in four days amid concern the accumulated demand for dollars in the aftermath of a nationwide strike won’t be met and after the central bank’s marginal rate declined at a currency auction.
The naira declined 0.2 percent to 161.320 per dollar by 3:30 p.m., according to data compiled by Bloomberg. Nigeria’s central bank sold $250 million today with the marginal rate, also used as the prevailing exchange rate, falling 0.1 percent to 157 naira compared with 156.85 naira at a previous foreign- currency sale on Jan. 18, the bank said in an e-mailed statement.
Labor unions in Africa’s biggest oil producer began a nationwide strike on Jan. 9, which limited trading in currencies, shut banks, businesses and ports after the government scrapped fuel subsidies on Jan. 1. Gasoline prices more than doubled from 65 naira ($0.40) a liter after cutbacks were announced. The workers suspended industrial action on Jan. 16 after President Goodluck Jonathan restricted gasoline-price increases to 97 naira a liter (0.3 gallon).
“There are fears the central bank will not be able to clear the foreign exchange demand that piled up during the strike,” Tunde Ladipo, chief executive officer of Valuechain Investment Ltd., said by phone today. “Retaining the subsidy, even by a half, might affect reserves and the ability of the central bank to intervene in the market.”
Ghana’s cedi rose for a second day, advancing 0.5 percent to 1.6971 per dollar as of 3:40 p.m. in Accra, the capital, according to data compiled by Bloomberg.
To contact the reporter on this story: Emele Onu in Lagos at email@example.com
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