Nigeria’s Naira Snaps Two Days of Gains on Reduced Dollar Supply
Nigeria’s naira weakened, snapping two days of gains after the central bank sold the lowest amount of the U.S. currency in two weeks at an auction today.
The currency of Africa’s biggest oil producer fell as much as 0.4 percent and traded 0.1 percent lower at 157.39 per dollar as of 2 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
The Central Bank of Nigeria sold $112 million to lenders, the lowest since the Jan. 23 sale, it said in an -emailed statement. The regulator sells dollars on Mondays and Wednesdays to support the naira.
“Reduced dollar sales by the central bank increased demand at the interbank market, putting the local unit under pressure,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone today.
Oil-producing companies, including Royal Dutch Shell Plc and Exxon Mobil Corp., periodically sell dollars to lenders to meet local spending needs and are the second-biggest source of foreign currency after the central bank. The naira may gain support from the expected sale of dollars later today by an oil company, Ladipo said.
The market has witnessed “stronger supply outside CBN’s auctions, particularly from oil firms,” Ridle Markus, Dumisani Ngwenya and Mike Keenan, Africa strategists at Absa Capital in Johannesburg, wrote in e-mailed comments today.
The yield on the country’s 16.39 percent domestic bonds due in January 2022 fell 11 basis points to 11.01 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 was little changed at 4.06 percent today.
Ghana’s cedi was unchanged at 1.9055 per dollar in Accra, the capital.
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