Nigerian Naira Heads for Two-Week Low as Oil Price Retreats

Nigeria’s naira depreciated for a third day, heading for the lowest in two weeks as oil, the nation’s key export, retreated and prompted a slide in the external reserves of Africa’s biggest oil producer.
The currency of sub-Saharan Africa’s second-biggest economy slid 0.1 percent to 158.10 per dollar by 11:31 a.m. in Lagos, Nigeria’s commercial capital, poised for its weakest since April 2, according to data compiled by Bloomberg.

Bonny Light Crude, the nation’s main export grade, slid for a fourth day, dropping 1.7 percent to $104.01 in New York, a 14 percent decline from this year’s high of $120.54 in February. Brent crude and West Texas Intermediate also eased as first quarter economic growth unexpectedly eased in China, the world’s second-largest crude consumer.

Nigeria’s foreign-currency reserves declined for three days last week before reaching $48.705 billion on April 11, according to data on the Central Bank of Nigeria website.

“We expect to see build-up of pressure on the naira on the back of recent decrease in external reserves,” analysts at Lagos-based Cowry Asset Management Ltd., led by Edgar Ebinum, wrote in an e-mailed note to clients today.

Borrowing costs on the nation’s local-currency debt due January 2022 fell six basis points, or 0.06 percentage point, to 11.02 percent, according to April 12 prices on the Lagos-basedFinancial Markets Dealers Association website.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 declined 2 basis points to 3.972 percent today.

Ghana’s cedi weakened less than 0.1 percent to 1.9445 per dollar in Accra, the capital.

Source: Bloomberg