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Nigerian Naira Pares Declines After Central Bank Dollar Auction

Sept. 24 (Bloomberg) -- Nigeria’s naira pared declines against the dollar after the central bank sold the most U.S. currency in almost a month at an auction.

The currency of Africa’s biggest oil producer declined as much as 0.2 percent to 158 per dollar on the interbank market, the weakest on a closing basis since Sept. 5 and traded less than 0.1 percent at 157.74 per dollar as of 3:35 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $250 million at an auction, the highest amount since an Aug. 29 sale, the Abuja-based bank said today in an e-mailed statement. The regulator, which sells foreign exchange to lenders at an auction and directly through the interbank market to stabilise the naira aims to keep the local currency within a 3 percent band around 155 per dollar.

“The central bank increased dollar liquidity by raising sales at the auction, but there is still unmet demand, pushing the naira to depreciation,” Sewa Wusu, a currency analyst at Lagos-based Sterling Capital Ltd., said in a telephone interview today. Fuel imports have been a source of pressure on the naira, according to the central bank.

The West African nation relies on imports to meet more than 70 percent of domestic fuel needs because of a lack of refining capacity, according to the Petroleum Ministry.

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 one basis point to 4.75 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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