Naira Falls for a Second Day, Paring Gain in Week on Demand

The naira depreciated for a second day, paring its advance against the dollar this week as foreign exchange bureaus and importers demanded the U.S. currency.

The currency of Africa’s largest oil producer retreated 0.2 percent to 161.07 per dollar as of 11:52 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira has appreciated 0.4 percent this week.

“The decline is from buying pressure, arising from bureax de change operators, individuals buying dollars for summer holidays and importers,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., which trades currencies, said by phone today.

The central bank said on July 9 it cut the amount of weekly dollar sales to each bureau de change to $50,000 from $75,000 previously. The Abuja-based bank said July 24 it reduced the amount of foreign exchange banks can hold as a percentage of their shareholders’ funds to 1 percent from 3 percent and kept its interest rate unchanged at 12 percent. The amount of cash as a percentage of deposits that commercial banks must hold with the central bank was increased to 12 percent from 8 percent, Governor Lamido Sanusi said.

Inflation accelerated to 12.9 percent in June, from 12.7 percent in May, the Abuja-based National Bureau of Statistics said July 18. The country’s foreign-currency reserves have fallen by $1.3 billion since the end of May to $36.4 billion, according to July 25 data compiled by the central bank. Fuel imports have been a source of pressure on the naira, according to the Central Bank of Nigeria.

The yield on Nigeria’s seven-year domestic bonds due June 2019 fell six basis points, or 0.06 percentage point, to 16.43 percent, according to July 26 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 declined by four basis points to 5.39 percent today.

Ghana’s cedi depreciated 0.1 percent to 1.9575 per dollar in Accra, the capital, the weakest since at least 1993.

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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