Nigeria’s naira fell the most in more than 1 1/2 years as the central bank held its last currency auction before tightened controls of the sales are implemented, boosting demand for dollars.
The currency of Africa’s biggest crude producer retreated 1.1 percent to 161.55 naira per dollar by 5:11 p.m. in Lagos, the commercial capital, its biggest drop since January 2012 on a closing basis. That brought its decline this month to 0.1 percent and pared a quarterly gain of 0.6 percent, the first advance in three.
The Central Bank of Nigeria will replace its scheduled wholesale foreign-exchange sales with retail auctions from Oct. 2 to curb dollar demand, the Abuja-based lender said on Sept. 26. The central bank offers foreign currency twice a week to keep the naira within a range of 3 percentage points above or below 155 per dollar. The regulator sold $300 million today, compared with $300.2 million on Sept. 25.
“Dollar demand was high today at the interbank market and the central bank auction, being the last day for the wholesale” system, Abubakar Mohammed, chief executive officer of Lagos-based Forward Marketing Bureau de Change Ltd., said by phone. “With retail auctions, banks will buy dollars on proof of request from customers, unlike in wholesale auctions when they could buy and resell.”
The naira’s decline today was the biggest among 24 African currencies monitored by Bloomberg. It rallied 0.8 percent last week after Central Bank of Nigeria Governor Lamido Sanusi held the benchmark lending rate at a record high 12 percent on Sept. 24 and pledged to use the country’s foreign-exchange reserves to bolster the currency.
While the naira depreciated today, retail auctions will probably tighten dollar demand and help support the currency, which has weakened 3.3 percent this year, Mohammed said.
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