Nigerian Naira Weakens on Short Dollar Supply Before Auction

Nigeria’s naira depreciated on short dollar supply before a currency auction today after the central bank sold the lowest amount of the U.S. currency last week in four.

The currency of Africa’s biggest oil producer weakened 0.1 percent to 157.78 per dollar on the interbank market as of 12:15 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold a total of $309.42 million at its two regular foreign-currency auctions last week, the lowest amount since it held a single sale in the week ended Aug. 24. The regulator, which sells foreign exchange to lenders at an auction and directly through the interbank market to stabilise the naira will sell the U.S. currency at an auction today. The Abuja-based bank aims to keep the naira within a 3 percent band around 155 per dollar.

“Dollar supply is below what the market needs but that is expected to rise with the auction, given the central bank’s aim to stabilise the currency,” Sewa Wusu, a currency analyst at Lagos-based Sterling Capital Ltd., said in a telephone interview today.

The central bank kept its benchmark interest rate unchanged at a record 12 percent on Sept. 18 to control inflation and bolster the naira, Governor Lamido Sanusi said. The inflation rate slowed to 11.7 percent in August from 12.8 percent the previous month, the lowest this year, the statistics agency said Sept. 16.

The yield on Nigeria’s 16 percent domestic bonds due June 2019 rose 2 basis points to 12.98 percent, according to Sept. 21 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 rose two basis points to 4.799 percent.

Ghana’s cedi gained less than 0.1 percent to 1.92 a dollar in Accra, the 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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