Nigerian Naira Weakens to Three-Month Low on Gasoline BillsEmele Onu
Nigeria’s naira retreated to the lowest in three months against the dollar on demand for the U.S. currency to fund gasoline imports.
The currency of Africa’s largest oil producer declined 0.3 percent, to 157.90 a dollar as of 3:33 p.m. in Lagos, the commercial capital, the weakest since Nov. 27, according to data compiled by Bloomberg.
Nigeria relies on imports to meet 70 percent of its fuel needs because of inadequate refining capacity, according to the Petroleum Ministry. Fuel imports have been a source of pressure on the naira, according to the central bank.
The currency’s decline is “a result of heightened demand for dollars by oil importers, despite increased supply by the central bank,” Oladipupo Adekanmbi and Denis Okolie, analysts at Lagos-based Greenwich Trust Group Ltd., said today in an e-mailed note to clients.
The Central Bank of Nigeria sold $150 million at an auction yesterday, compared with $120 million at the previous sale on Feb. 20, according to data on its website. The regulator, which sells dollars to lenders on Mondays and Wednesdays, aims to keep the currency within a 3 percent band around 155 per dollar.
The Abuja-based bank held the benchmark interest rate at a record high 12 percent for an eighth straight time on Jan. 21 to control inflation and stabilize the naira.
The yield on the country’s 16.39 percent domestic bonds due January 2022 fell seven basis points to 10.49 percent, according to yesterday’s data compiled on the Financial Markets Dealers Association website.
Yields on Nigeria’s $500 million of Eurobonds due January 2021 rose five basis points to 4.482 percent today.
Ghana’s cedi depreciated for the seventh day, dropping less than 0.1 percent to 1.9155 per dollar in Accra, the capital.