Nigerian Naira Depreciates as Oil Industry Withholds Dollars
Nigeria’s naira weakened against the dollar after expected sales of the U.S. currency by oil- producing companies failed to materialize.
The currency of Africa’s biggest oil producer weakened 0.1 percent to 157.50 a dollar as of 4 p.m. in Lagos, the commercial capital, after gaining 0.2 percent yesterday on bets of oil industry month-end supply. The naira has appreciated 3 percent this year, the second-best performing currency tracked by Bloomberg in Africa.
Oil-producing companies, which sell dollars to meet domestic expenses around the month-end, are the second-biggest source of foreign currency after the Central Bank of Nigeria, which sells dollars to lenders at auctions on Mondays and Wednesdays to help manage the exchange rate.
“The market expected month-end supply from oil companies yesterday but that didn’t happen,” Abubakar Mohammed, chief executive of Lagos-based Forward Marketing Bureau de Change Ltd., said by phone today. “The sales are still expected.”
The naira’s appreciation can be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20, after the regulator held its benchmark rate at a record-high 12 percent.
Inflation, which accelerated for the first time in four months to 11.7 percent in October on widespread flooding of farms, is still above the bank’s target of less than 10 percent.
Yields on 10-year naira debt rose three basis points to 12.38 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 fell seven basis points to 4.284 percent.
Ghana’s cedi weakened for a sixth day, slipping less than 0.1 percent to 1.9015 a dollar in Accra, the capital.
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