Naira Falls to Month-Low Before Central Bank Stops Dollar Sales
The naira declined to its lowest in a month as dollar demand increased before the Central Bank of Nigeria ends foreign-exchange auctions for the year.
The currency of Africa’s biggest oil producer slipped 0.2 percent to 158.2 per dollar as of 2:30 p.m. in Lagos, the commercial capital. A close at this price would be its weakest since Nov. 16. The naira has gained 2.6 percent this year, the second-best performing currency in Africa, according to data compiled by Bloomberg.
Companies have increased demand for foreign-currency after the central bank said last week it will end dollar sales to lenders at twice-weekly auctions on Dec. 19 and resume on Jan. 7, according to Ecobank Transnational Inc. (ETI) strategists, led by Paris-based Paul-Harry Aithnard.
Ending the auctions is “likely to create a major shortfall in dollar supply, thereby jeopardizing recent exchange rate stability,” the Ecobank strategists said. The naira weakened 0.4 percent last week due to a “temporary surge in corporate demand for dollars to cover import bills ahead of the Christmas season,” the strategists said.
Nigeria’s inflation rate rose for the second consecutive month in November to 12.3 percent from 11.7 percent, the National Bureau of Statistics said yesterday in an e-mailed report. The central bank left its benchmark interest rate unchanged at 12 percent this year to control inflation and stabilize the naira.
Yields on 10-year naira debt rose three basis points to 11.88 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 fell one basis point to 4.13 percent today.
Ghana’s cedi declined 0.2 percent to 1.8975 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