Nigeria’s Naira Weakens to Record Low as Stocks Plunge on Oil

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The naira fell to a record low as oil held near $60 a barrel and traders rushed to buy dollars before the central bank’s final foreign-exchange auction of 2014.

The currency of Africa’s largest crude producer fell 4 percent, the most since January 2009 on a closing basis, to 187.05 per dollar as of 4:48 p.m. in Lagos, the commercial capital. The Nigerian Stock Exchange All Share Index retreated 2.8 percent to 28,961.67, falling for an eighth day to the lowest since January 2013. Brent fell 1.3 percent to $59.26 a barrel in London, having been as high as $111.98 on June 23.

Policy makers in Nigeria, which gets 70 percent of government revenue and almost all export earnings from oil, have proposed spending cuts and raised interest rates to a record high since crude prices started to fall in June. The continent’s biggest economy will expand 5.5 percent in 2015, Finance Minister Ngozi Okonjo-Iweala said when presenting the nation’s budget today, down from an earlier forecast of 6.35 percent.

The Central Bank of Nigeria’s announcement that today’s auction is the last for 2014 caused “traders and importers that can’t access the window to flood the interbank market with their demand,” Kunle Ezun, a Lagos-based currency strategist at Ecobank Transnational Inc., said by phone. “If the rate remains at this level tomorrow, we expect the central bank to intervene” in the interbank market with sales of dollars, he said.

Consumer Stocks

Foreign-exchange auctions will reopen Jan. 5, Ibrahim Mu’azu, a spokesman for the Abuja-based regulator, said by phone.

Consumer companies were among the main losers in the equity market. Nigerian Breweries Plc, the West African nation’s biggest brewer, dropped 4.8 percent. Flour Mills of Nigeria Plc tumbled 9.7 percent to its lowest since February 2010. The all-share index dropped 30 percent this quarter, the fourth-worst performer among 93 gauges tracked by Bloomberg.

“Some of these names look really cheap and investors see value, but they aren’t keen on getting back into the market unless there’s greater visibility on oil prices,” Esili Eigbe, head of West African research at Exotix Ltd., said by phone from Lagos. “The decline in oil prices and government revenue has an impact on the exchange rate. That in turn affects consumer spending.”

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