Naira Snaps 4-Day Drop as Nigeria Rate Cut Not Seen on InflationChris Kay
The naira snapped a four-day retreat against the dollar on speculation that Nigeria’s central bank will hold interest rates at a record high as inflation stayed above the regulator’s target.
The currency of Africa’s biggest oil producer slid 0.1 percent to 157.045 a dollar by 2:58 p.m. in Lagos, the commercial capital. The naira gained 3.9 percent last year, the strongest performance among African currencies tracked by Bloomberg.
Nigeria’s inflation rate eased to 12 percent in December, from 12.3 percent a month earlier, the first decline in three months as the effects of flooding that damaged agricultural output began to recede. The bank’s target is below 10 percent. Core inflation, which excludes agricultural products, rose 13.7 percent in December from a year earlier, compared with 13.1 percent in the previous month, the nation’s statistics bureau said today.
“These data indicate that underlying inflationary pressures remain high in the economy and do not support monetary easing anytime soon,” Leon Myburgh and Coura Fall, Africa strategists at Citigroup Inc. in Johannesburg, wrote in an e-mailed note today.
The Central Bank of Nigeria’s Monetary Policy Committee kept the benchmark interest rate unchanged at 12 percent in its meetings last year to curb inflation and support the naira.
Yields on naira debt due 2022 fell seven basis points to 11.37 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 were little changed at 3.741 percent today.
Ghana’s cedi weakened for a sixth day, declining 0.1 percent to 1.91 a dollar in Accra, the capital.