The naira retreated for the first week in four on increased demand for dollars from importers in Nigeria preparing for the festive season.
The currency of Africa’s biggest oil producer fell as much as 0.1 percent, before trading less than 0.1 percent higher at 157.65 a dollar as of 3:43 p.m. in Lagos, the commercial capital. The naira has declined 0.5 percent this week, according to data compiled by Bloomberg.
There is “increased demand as people are planning for Christmas,” Babatunde Obaniyi, head of market risk at Lagos-based Greenwich Trust Group Ltd., said by phone today. “We will see the height of demand next week.”
Demand for consumer goods rises during religious festivities in Nigeria, where the population of more than 160 million is almost evenly split between Muslims and Christians. The Central Bank of Nigeria sells dollars to lenders at foreign-currency auctions on Mondays and Wednesdays to help manage the exchange rate. The regulator sold $246.05 million at this week’s sales, the most in two weeks. The Abuja-based bank will end this year’s sales on Dec. 19 and resume on Jan. 7, it said in an e-mailed statement today.
The naira has appreciated 2.9 percent this year, the second-best performer in Africa. The currency has benefited from tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20 after the regulator held its benchmark rate at a record-high 12 percent.
Yields on 10-year naira debt fell one basis point to 11.88 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined two basis points to 4.14 percent today. The yields have dropped six basis points this week.
Ghana’s cedi climbed less than 0.1 percent to 1.8905 per dollar in Accra, the capital, leaving it little changed in the week.