Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Naira Pares Drop as Nigerian Central Bank Increases Dollar Sales

Don't Miss Out —
Follow us on:

March 18 (Bloomberg) -- Nigeria’s naira pared its decline after the central bank increased dollar sales to lenders at a regular weekly auction.

The currency of Africa’s biggest oil producer fell as much as 0.6 percent, before easing the drop to trade less than 0.1 percent lower at 158.65 per dollar by 3:30 p.m. in Lagos, the commercial capital, bringing its depreciation this year to 1.6 percent, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $300 million to lenders today, higher than the $180 million sold a week ago and the most at a single sale since Dec. 19, it said in an e-mailed statement. The Abuja-based regulator uses the twice-a-week auctions to stabilize the naira as costs of importing refined fuel, which account for 70 percent of the local gasoline market, boost dollar demand and put pressure on the currency. The bank cut total sales by 6 percent last week to $360 million.

“They are increasing the supply because the multinationals have not been supplying dollars,” Edgar Ebinum, a Lagos-based analyst at Cowry Asset Management Ltd., said by phone today from the city. “The rate of foreign participation in our securities has also reduced.”

Inflation accelerated to 9.5 percent in February from 9 percent a month earlier, the statistics agency said on March 17. Central bank Governor Lamido Sanusi said on Jan. 25 it will be “very difficult” to keep it at the regulator’s target of less than 10 percent for the rest of the year.

Rate Decision

“The interbank dollar-naira has shifted up as foreign portfolio flows slowed somewhat, which reduced the availability of dollars in the market,” Standard Bank strategists, led by Stephen Bailey-Smith in London, wrote in a report today. “Bonds are likely to trade in a 10.5 percent to 11.5 percent range for some time to come until a clearer direction on inflation and thus policy rates materializes.”

Borrowing costs on the 16.39 percent domestic bonds due January 2022 increased 17 basis points to 11.44 percent, according to March 15 data compiled on the Financial Markets Dealers Association website.

The central bank’s Monetary Policy Committee will announce its decision on the benchmark interest rate, which was held at a record 12 percent for eight consecutive meetings, tomorrow. Nine out of 10 economists surveyed by Bloomberg expect the rate to be maintained, while one predicted a 50 basis-point cut.

“The improvement in economic growth in quarter four and some recent pressures on the naira, despite the CBN’s significantly stronger external buffers, also appear to favor an unchanged policy stance,” Ridle Markus and Dumisani Ngwenya, Africa strategists at Absa Capital Ltd. in Johannesburg, wrote in an e-mailed note today.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell 6.5 basis points, or 0.07 percentage point, to 4.243 percent.

Ghana’s cedi weakened for a fifth day, sliding less than 0.1 percent to 1.9355 per dollar in Accra.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.