Nigerian Naira Weakens as Central Bank Reduces Dollar Supplies

The naira depreciated to the lowest in almost a week as the Central Bank of Nigeria offered fewer dollars at an auction, offsetting its decision to hold the key lending rate at a record high to support the currency.
The currency of Africa’s biggest oil producer fell 0.2 percent to 158.95 per dollar by 4:19 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

The Abuja-based bank sold $280 million at a foreign-currency auction today, less than the $300 million given out at the previous sale on March 18, it said in an e-mailed statement. The Monetary Policy Committee kept its benchmark interest rateat a record high of 12 percent for a ninth consecutive meeting yesterday to support the naira.

“Traders reacted to lower dollar supply by the central bank amid rising demand,” Sewa Wusu, an analyst at Lagos-based Sterling Capital Ltd., said by phone. “The policy rate should boost naira overtime as it checks liquidity of the local unit.”

In the next week, the naira should trade at about 158.7 per dollar with monetary policy support, Kunle Ezun and Kenneth Asenime, analysts at Ecobank Transnational Inc. in Lagos, wrote in an e-mailed note to clients today.

The yield on the country’s 16.39 percent domestic bonds due January 2022 declined 34 basis points to 11.26 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Yields on the $500 million of Eurobonds due January 2021 declined 10 basis points to 4.232 percent.

Ghana’s cedi weakened 0.1 percent to 1.9373 per dollar in Accra, the capital.

Source: Bloomberg