Naira Falls First Day in Four as Dollar Demand Outweighs Supply

The naira weakened for the first time in four days as demand for dollars from oil importers and businesses outweighed supply.

The currency of Africa’s biggest oil producer declined 0.1 percent to 157.5975 per dollar on the interbank market as of 12:20 p.m. in Lagos, according to data compiled by Bloomberg.

“Dollar demand has deepened from oil importers and commercial businesses making imports for the Christian Easter celebrations due early next month,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said by phone.

Nigeria approved a tender for 3.57 million metric tons of gasoline imports for the second quarter on March 12. Fuel imports have been a leading source of pressure on the naira, according to the Central Bank of Nigeria. Africa’s most populous country of more than 160 million people, with Muslims and Christians almost at par, experiences higher imports of personal and household items during religious festivities.

“Dollar supply has been boosted from inflow into fixed income securities and supply at currency auction.”

Nigeria sold $200 million at a foreign-currency auction yesterday, with lenders buying the entire amount on offer, the Abuja-based central bank said. The marginal rate, which is also used as the prevailing exchange rate, was 156.06 naira, unchanged from the previous sale on March 19.

Rates Unchanged

The central bank left its key interest rate unchanged at 12 percent for a third consecutive meeting on March 20 to curb inflation and stabilise the naira. Inflation (NGCPIYOY) in the West African country declined to 11.9 percent in February from 12.6 percent a month earlier, the National Bureau of Statistics said March 19.

The yield on Nigeria’s $500 million of dollar bonds due 2021 fell 0.01 percent to 5.537 percent. Borrowing costs of domestic bonds due 2015 rose one basis point to 15.46 percent, according to prices on the Financial Markets Dealers Association website.

Ghana’s cedi weakened for a second day, down less than 0.1 percent to 1.7775 per dollar in Accra.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Hilton Shone at hshone@bloomberg.net

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