Naira Snaps Five-Day Decline as Central Bank Said to Intervene
Nigeria’s naira rose, halting a five-day decline, as the central bank was said to have sold dollars directly to the market outside of its regular currency auctions.
The currency of Africa’s biggest oil producer rose as much as 0.9 percent and traded 0.6 percent stronger at 158.65 per dollar by 3:06 p.m. in Lagos, the commercial capital, its biggest gain on a closing basis since Oct. 4. The naira has dropped 1.5 percent this year, according to data compiled by Bloomberg.
“There was intervention from the central bank,” Tega Adeda, a foreign-exchange trader at Stanbic IBTC Holding Co. (STANBIC), said by phone from Lagos, without specifying the amount sold. “There was a lot of corporate demand” and the regulator is trying to stabilize the market, he said. Ugochukwu Okoroafor, a spokesman for the Abuja-based Central Bank of Nigeria, didn’t answer four calls made to his mobile phones seeking comment.
The bank reduced dollar sales to lenders by 6 percent this week to $360 million. The regulator uses the twice-a-week auctions to stabilize the naira as costs of importing refined fuel, which accounts for 70 percent of the local gasoline market, boosts dollar demand and puts pressure on the currency, according to the central bank.
At the auctions, “demand appeared to have been higher,” Ridle Markus and Dumisani Ngwenya, Africa strategists at Barclays Plc’s Absa Capital in Johannesburg, wrote in a note to clients today. Yet, “with significantly improved external buffers, ongoing tight monetary policy and continued oil inflows amid relatively stable production and oil prices, we expect the naira to remain supported in the short term.”
The Monetary Policy Committee, led by Governor Lamido Sanusi, will hold its policy rate at 12 percent for a ninth consecutive meeting on March 18 and 19, according to eight economists surveyed by Bloomberg News.
The central bank held the rate at the record level on Jan. 21 to control consumer prices and maintain the naira’s level. Inflation eased to 9 percent in January from 12 percent in December, the statistics bureau said last month.
Borrowing costs on the country’s 16.39 percent domestic bonds due January 2022 rose nine basis points to 11.27 percent, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 fell two basis points to 4.204 percent.
Ghana’s cedi weakened for a fourth day, sliding 0.2 percent to 1.9355 per dollar in Accra.
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