Nigeria’s naira headed for its weakest level against the dollar since July 23 as demand increased before the central bank’s second foreign-exchange auction of the week.
The currency of the continent’s biggest crude producer retreated 0.2 percent to 160.85 per dollar as of 1:02 p.m. in Lagos, the commercial capital, the lowest on a closing basis in more than three weeks. The naira weakened 2.9 percent this year, the worst in West Africa after the Ghanaian cedi and Liberian dollar, among 24 of the continent’s currencies tracked by Bloomberg.
The Central Bank of Nigeria, which will sell dollars to lenders at an auction today to support the local currency, sold $221.6 million on Aug. 12, the lowest since May 15. The regulator is the biggest supplier of the U.S. currency and offers foreign exchange at a target of plus or minus 3 percent of 155 per dollar.
“Importers that couldn’t meet their demand for dollars at the auction are resorting to the interbank market, thereby putting the naira under pressure at that window,” Kunle Ezun, an analyst at Ecobank Transnational Inc. (ETI) in Lagos, said by phone today. “An increase in central bank supply will reduce the pressure.”
The bank’s Monetary Policy Committee left its benchmark interest rate at a record 12 percent for an 11th consecutive meeting on July 23 to protect the currency of Africa’s second-biggest economy. It introduced a 50 percent cash reserve requirement on public-sector funds after warning about the risk of excess liquidity.
Yields on Nigeria’s $500 million Eurobonds due January 2021 were little changed at 5.48 percent. Borrowing costs on local-currency debt due January 2022 rose 6 basis points, or 0.06 percentage point, to 13.09 percent yesterday, according to data compiled by Bloomberg.
Ghana’s cedi was unchanged at 2.0950 per dollar in the capital, Accra.
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