Nigeria’s Naira Trading Limited as Unions Suspend Fuel Strikes
Naira trading remained limited as banks stayed shut even after Nigeria’s labor unions suspended their national strike as President Goodluck limited gasoline- price increases.
The currency of Africa’s largest oil producer was little changed at 161.94 per dollar as of 3:19 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
Labor unions said they suspended a general strike “in the interest of national survival,” after Jonathan had announced a limit of 97 naira (69 cents) on gasoline prices. The cost of the fuel more than doubled from 65 naira a liter when subsidies were scrapped on Jan. 1, sparking nationwide strikes that started Jan. 9. The action has limited trading in the national currency and closed banks and ports.
The naira interbank market is still effectively closed, Samir Gadio, a London-based emerging-market strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions from Bloomberg today.
“There will be an increase in demand as the market reopens, but the dollar-naira path will depend on the Central Bank of Nigeria’s reaction,” he said. “If the central bank is proactive in selling dollars to the interbank market, then the upward pressure on dollar-naira may actually be mitigated.”
Nigeria sold $198 million at a foreign-currency auction today, less than the $200 million on offer, the Abuja-based Central Bank of Nigeria said in an e-mailed statement.
Dollars were sold for between 156.70 naira and 157 naira each. The marginal rate, which is also used as the prevailing exchange rate, was 156.70, unchanged from the previous auction on Jan. 11, it said.
The government ended subsidies, which it said cost 1.2 trillion naira ($7.4 billion) last year, and pledged to spend the savings on power plants and roads.
“The banks remain closed owing to security concerns as labor is continuing with the strike,” James Eze, a spokesman for Mainstreet Bank Ltd., said by phone today from Lagos.
Ghana’s cedi gained less than 0.1 percent to 1.717 per dollar as of 3:20 p.m. in Accra, the capital, according to data compiled by Bloomberg.
To contact the editor responsible for this story: Gavin Serkin at firstname.lastname@example.org