Nigeria’s naira posted its longest losing streak in seven months as corporate demand for dollars wasn’t matched by the central bank, which cut the amount of U.S. currency it sold in auctions this week.
The currency of Africa’s biggest oil producer retreated for a fifth day, weakening 0.4 percent to 159.45 per dollar by 3:30 p.m. in Lagos, the commercial capital. That’s the lowest since Aug. 8 and the longest run of losses since the same month, according to data compiled by Bloomberg.
Lenders bought all $360 million offered this week, compared with $384 million last week, the Abuja-based Central Bank of Nigeria said in an e-mailed statement. Nigeria relies on imports to cover 70 percent of its 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.
The currency weakened “largely due to increased corporate demand to cover import bills and other foreign-exchange obligations,” Kunle Ezun and Kenneth Asenime, analysts at Ecobank Transnational Inc. in Lagos, wrote in an e-mailed note to clients today.
The central bank held its benchmark rate at a record-high 12 percent for an eighth time on Jan. 21 to control consumer prices and stabilize the naira. Inflation eased to 9 percent in January from 12 percent in December, the statistics bureau said on Feb. 18.
“Over the short term, the naira will likely continue to trade on the interbank market within the central bank’s 3 percent band” above or below 155 naira per dollar, Ezun and Asenime said.
Borrowing costs on the country’s 16.39 percent domestic bonds due January 2022 rose 15 basis points to 11.18 percent, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 fell four basis points to 4.147 percent.
Ghana’s cedi weakened for a third day, sliding 0.4 percent to 1.9325 per dollar in Accra.