Nigeria’s naira depreciated for a second day as importers demanded dollars before the central bank auctions the U.S. currency today.
The currency of Africa’s biggest oil producer weakened 0.1 percent to 157.225 a dollar as of 10:25 a.m. in Lagos, the commercial capital. The naira has appreciated 3.2 percent this year, the second-best performer tracked by Bloomberg in Africa.
“Dollar demand is rising for the festive season and is exceeding supply at the interbank market due to a shortfall in supply,” Sewa Wusu, analyst at Lagos-based Sterling Capital Ltd., said by phone.
Demand for gasoline and consumer goods rises during religious festivities in Nigeria, a nation of more than 160 million people with a population almost evenly split between Muslims and Christians. The country relies on imports to meet 70 percent of its fuel needs because of inadequate refining capacity, according to the Petroleum Ministry.
The Central Bank of Nigeria sells dollars to lenders at auctions on Mondays and Wednesdays to help keep the naira within a 3 percent band around 155 per dollar. The regulator sold $164.3 million at its auction on Dec. 3, the lowest since the Nov. 14 sale.
The Abuja-based bank held its benchmark interest rate at a record high 12 percent this year to ease inflation pressures and stabilize the naira. Inflation, which accelerated for the first time in four months to 11.7 percent in October, remains above the bank’s target of less than 10 percent.
The yield on 16.39 percent naira debt due January 2022 fell two basis points to 12.18 percent, according to yesterday’s prices on the website of the Lagos-based Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 fell three basis points to 4.184 percent.
Ghana’s cedi appreciated 0.2 percent to 1.8875 a dollar in Accra, the capital.
Editors: Peter Branton, Bryson Hull