Naira Down To N158.35 On Increased Demand

The value of the naira against the dollar fell the most in over five months as demand by oil companies to settle import bills and foreign exchange obligations weakened the currency.

Although the Central Bank of Nigeria sold $200 million at Wednesday’s auction, the largest sale it had made in a single auction in weeks, it was not enough to stem the effect of a high demand.

The naira retreated by 0.4 per cent, to N158.35 to a dollar, the biggest decline so far since October 5, 2012 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.

According to Lagos-based analyst at Ecobank Transnational Incorporated,  Kunle Ezun, “The weakening of the naira is due to increased dollar outflows to cover oil import bills and other foreign exchange obligations.”

Traders are also increasing dollar demand before next month’s Easter celebrations, Tunde Ladipo, Chief Executive Officer of Valuechain Investment Limited said.

The Central Bank of Nigeria had held the benchmark interest rate at a record high 12 per cent for an eighth straight time at its last monetary policy meeting to control inflation and stabilise the naira. The nation’s inflation rate fell to 9 percent in January from 12 per cent in December, the statistics bureau said on Feb. 18.




--Leadership