March 12 (Bloomberg) -- The naira fell for a third day, set for its lowest level in almost four months as importers in Africa’s second-biggest economy increased demand for dollars to pay bills.
The currency of Africa’s biggest oil producer declined 0.2 percent to 158.43 per dollar by 2:32 p.m. in Lagos, the commercial capital, the lowest on a closing basis since Nov. 16, according to data compiled by Bloomberg. The naira has slipped 1.4 percent this year.
The naira’s weakness is “largely due to increased corporate demand to cover import bills and other foreign-exchange obligations,” Kunle Ezun and Kenneth Asenime, Lagos-based strategists at Ecobank Transnational Inc., wrote in a note to clients today.
Nigeria relies on imports to cover 70 percent of its own fuel needs because of inadequate refining capacity, and those shipments into the country are a source of pressure on the naira, according to the central bank. Bonny Light Crude, the nation’s main export grade, slid for a third day, dropping 0.5 percent to $112.39 in New York.
“Although the naira has a weakening outlook, the steady rise in reserves to $47.9 billion -- around 10 months equivalent of imports -- provides a large cushion to support the naira in the weeks ahead,” Ezun and Asenime said.
Nigeria’s foreign-currency reserves have advanced 8 percent this year to $47.9 billion, according to March 8 data compiled by the Central Bank of Nigeria in the capital, Abuja.
The bank sold $180 million at an auction yesterday, compared with $150 million at the previous sale on March 6. The bank sells dollars to lenders on Mondays and Wednesdays to help stabilize the naira.
Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell 16 basis points, or 0.16 percentage point, to 4.097 percent. Borrowing costs on the country’s 16.39 percent domestic bonds due January 2022 declined 12 basis points to 11.14 percent, according to yesterday’s data compiled on the Financial Markets Dealers Association website.
Ghana’s cedi weakened 0.1 percent to 1.9225 per dollar in Accra, the capital.
To contact the reporter on this story: Chris Kay in Abuja at firstname.lastname@example.org
To contact the editor responsible for this story: Vernon Wessels at email@example.com