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Naira Drops Most in Week as Central Bank Reduces Dollar Supply

March 6 (Bloomberg) -- Nigeria’s naira depreciated for a second day, heading for the biggest drop in a week, after the central bank reduced the amount of dollars sold at an auction today.

The currency of Africa’s biggest oil producer weakened 0.3 percent, the most since Feb. 27 on a closing basis, to 158.05 per dollar as of 2 p.m. in Lagos, the commercial capital.

The Central Bank of Nigeria sold $150 million, down from $234.9 million at the previous sale on March 4, the Abuja-based bank said in an e-mailed statement. The regulator holds dollar auctions on Mondays and Wednesdays to help manage the exchange rate. Oil companies, which sell dollars to lenders to meet local spending needs are the second-biggest source of foreign currency.

“CBN’s level of intervention wasn’t enough to meet demand at the interbank market, as oil industry month-end sales have declined, after peaking on Monday,” Abubakar Mohammed, chief executive of Lagos-based Forward Marketing Bureau de Change Ltd., said by phone today.

The central bank held the benchmark interest rate at a record high 12 percent for an eighth time on Jan. 21 to control inflation and stabilize the naira. The nation’s inflation rate fell to 9 percent in January from 12 percent in December, the statistics bureau said Feb. 18.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell 18 basis points to 4.119 percent today.

The yield on the country’s 16.39 percent domestic bonds due January 2022 rose 16 basis points to 10.76 percent, according to yesterday’s data compiled on the Financial Markets Dealers Association website.

Ghana’s cedi was unchanged at 1.9150 per 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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