Naira Weakens Most in Five Months as Importers Demand DollarsEmele Onu
Nigeria’s naira fell the most in almost five months as importers demanded dollars to settle oil bills and foreign-exchange obligations.
Nigeria’s currency retreated 0.4 percent to 158.25 per dollar as of 3:21 p.m. in Lagos, the commercial capital, the biggest decline on a closing basis since Oct. 5, according to data compiled by Bloomberg.
Nigeria, Africa’s largest oil producer, relies on imports to cover 70 percent of its own fuel needs because of inadequate refining capacity. Fuel imports are a source of pressure on the naira, according to the central bank.
“The weakening of the naira is due to increased dollar outflows to cover oil import bills and other foreign-exchange obligations,” Kunle Ezun, a Lagos-based analyst at Ecobank Transnational Inc., said by phone today.
Traders are also increasing dollar demand before next month’s Easter celebrations, Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said.
Africa’s most populous country of more than 160 million people, with Muslims and Christians almost at par, imports higher levels of consumer goods during religious festivities.
The Central Bank of Nigeria sold $200 million at a foreign-currency auction today to stabilize the naira, compared with $150 million at the previous sale on Feb. 25, it said in an e-mailed statement. The regulator held the benchmark interest rate at a record high 12 percent for an eighth straight time on Jan. 21. The nation’s inflation rate fell to 9 percent in January from 12 percent in December, the statistics bureau said Feb. 18.
The yield on the country’s 16.39 percent domestic bonds due January 2022 rose six basis points to 10.55 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 fell six basis points to 4.45 percent today.
Ghana’s cedi appreciated 0.1 percent to 1.9155 per dollar in Accra.