The naira declined against the dollar as Nigeria’s benchmark crude blend retreated, paring its first monthly gain in three after monetary tightening by the central bank last week.
The currency of Africa’s biggest oil producer weakened 0.2 percent to 160.8975 a dollar as of 3:26 p.m. in Lagos, the commercial capital. The naira has gained 1.1 percent this month, according to data compiled by Bloomberg.
“Oil prices will continue to have a major influence on the value of the naira and if recent prices falls are sustained, the naira is likely to remain under pressure with an ongoing weakening bias,” Ecobank Transnational Inc. strategists led by Paul-Harry Aithnard in Paris, wrote in a note to clients today. The naira appreciated last week “partly due to recent indirect monetary tightening,” the Ecobank analysts wrote.
Nigerian benchmark Bonny Light crude, which has risen 8.4 percent this month, fell a second day, down 0.2 percent. The Central Bank of Nigeria 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.
The yield on Nigeria’s seven-year domestic bonds due June 2019 fell 10 basis points to 16.12 percent, according to July 30 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 declined 12 basis points to 5.33 percent today.
Ghana’s cedi depreciated 0.3 percent to 1.9575 per dollar in Accra, the capital.