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Nigeria’s Naira Weakens Against Dollar as Bank Auction Not Held

Oct. 2 (Bloomberg) -- Nigeria’s naira retreated against the dollar after strengthening last week as the central bank didn’t hold a currency auction because of a public holiday.

The currency of Africa’s biggest oil producer slipped as much as 0.2 percent to 157.55 per dollar and traded at 157.27 as of 2:13 p.m. in Lagos.

The currency gained 0.3 percent last week as the Central Bank of Nigeria sold $450 million in its regular Monday and Wednesday auctions, the largest amount in seven weeks. Yesterday’s auction wasn’t held as markets were closed to celebrate Nigeria’s 52nd year of independence. The naira has added 3.2 percent this year, the best performer in Africa, according to data compiled by Bloomberg.

The currency’s rally before this week was due to “sufficient” dollar supply by the central bank, Ecobank Transnational Inc. analysts, led by Paul-Harry Aithnard in Paris, wrote in an e-mailed note to clients today. “The naira outlook remains uncertain” because of strong import demand and a “structural imbalance between dollar supply and demand.”

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 yield on Nigeria’s 16.39 percent domestic bonds due January 2022 increased 11 basis points to 12.82 percent, according to Sept. 28 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 were little changed at 4.78 percent today.

Ghana’s cedi gained 0.2 percent to 1.893 a dollar in Accra, the capital.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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