Naira Weakens for Second Day as Companies Drive Demand

The naira depreciated for a second day against the dollar as businesses resuming for the year increased demand for dollars to pay for raw materials and industrial-goods imports.

The currency of Africa’s biggest oil producer retreated 0.3 percent to 156.80 a dollar as of 3:10p.m. in Lagos, the commercial capital. The naira gained 3.9 percent last year, the strongest performance of African currencies tracked by Bloomberg.

“We expect to see increase in demand for the dollar as more businesses resume from the Christmas and New Year holidays,” analysts at Lagos-based Cowry Asset Management Ltd. led by Edgar Ebinum said today in an e-mailed note.

Businesses close during religious festivities in Nigeria, a nation of more than 160 million people with a population almost evenly split between Muslims and Christians. The Central Bank of Nigeria, which sells dollars to lenders to stabilize the naira, resumed twice-weekly foreign-currency auctions Jan. 7 after halting them on Dec. 19.

The regulator sold $11.8 million at an auction today, compared with $43.2 million at the previous sale on Jan. 9, it said in an e-mailed statement.

Yields on 10-year naira debt fell three basis points to 11.31 percent, according to Jan. 11 prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined nine basis points to 3.735 percent today.

Nigeria’s inflation rate rose for a second month in November to 12.3 percent from 11.7 percent, the National Bureau of Statistics said Dec. 17. The central bank left the benchmark interest rate unchanged at 12 percent last year.

Ghana’s cedi weakened for a third day by 0.1 percent to 1.9045 per dollar in Accra, the capital.

Editors: Peter Branton, Stephen Kirkland

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