Nov. 28 (Bloomberg) -- Nigeria’s naira fell to a record low at a currency auction today after the central bank failed to meet dollar demand.
Nigeria sold $200 million at a foreign-currency auction today, less than the $315.6 million demanded by lenders, according to an e-mailed statement today from Central Bank of Nigeria. The marginal rate, which is also used as the prevailing exchange rate, fell to a record low of 157.26 per dollar, according to data compiled by Bloomberg. The currency of Africa’s biggest oil producer retreated for a second day, declining 0.4 percent to 160.12 per dollar, as of 3:39 p.m. on the freely moving interbank market in Lagos.
The central bank on Nov. 21 lowered the midpoint of its exchange rate band at its twice-weekly auctions to 155 naira per dollar from 150 naira, amid pressure from rising imports and on concern of a weakening oil price, the source of more than 95 percent of Nigeria’s foreign-exchange income. Central Bank Governor Lamido Sanusi said Nov. 21 that the regulator is seeking a convergence between the auction and interbank rates.
The spread between the two exchange rates “has compressed lately as the CBN has been providing ample dollars to the interbank market, which means the central bank is in the process of achieving a relative degree of exchange rate unification,” Samir Gadio, a London-based emerging markets strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today.
The central bank has raised its key rate at every meeting this year until it kept rates on hold at the latest Nov. 21 monetary policy committee meeting. The bank increased it by 2.75 percentage points in October as inflationary pressures mounted.
Demand fueled by imports “is relatively constant while the supply of foreign exchange clearly hinges on oil and gas export revenues,” FBN Capital strategists, led by London-based Gregory Kronsten, wrote in a report today. “Business has been accumulating foreign exchange positions, it seems, in the belief that further depreciation lies ahead.”
Ghana’s cedi fell for a third session, declining 0.2 percent to 1.6455 per dollar, as of 2:50 p.m. in Accra, the lowest on record,according to data compiled by Bloomberg.
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