BLBG:Nigeria’s Naira Weakens Against the Dollar After General Strike
Nigeria’s naira fell against the dollar as businesses and banks resumed operations after labor unions suspended a general strike yesterday.
The currency of Africa’s biggest oil producer weakened 0.4 percent to 162.63 per dollar on the interbank market as of 10:32 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. Earlier it fell to 163.15 per dollar, the lowest since Dec. 30.
The West African nation’s labor unions suspended strikes and protests yesterday after President Goodluck Jonathan limited gasoline-price increases to 97 naira ($0.60) a liter (0.3 gallon). The strike, which shut banks, businesses and ports, began Jan. 9 after the government scrapped subsidies, which it said cost 1.2 trillion naira last year, and vowed to spend the savings on power plants and roads. Gasoline prices had more than doubled from 65 naira a liter.
“With the market being closed over the past few days, we do expect demand for foreign exchange to rise sharply as corporates and banking activities resume,” Ridle Markus, an Africa strategist at Barclays Plc-owned Absa Capital in Johannesburg, said in an e-mailed reply to questions today. “Demand at tomorrow’s auction may be much higher than usual, which could put depreciation pressure on the naira against the U.S. dollar.”
Interest Rates
Central Bank of Nigeria Governor Lamido Sanusi said it may be “counter productive” to raise interest rates in response to a jump in fuel prices that will probably push up inflation.
“We will have to see where the balance of the data points to, but from where I sit it looks like holding for a bit is the best option,” Sanusi said in an e-mailed response to questions yesterday. The committee will meet Jan. 30-31, according to Sanusi, who said he isn’t speaking on behalf of the Abuja-based bank’s Monetary Policy Committee.
The central bank left the benchmark lending rate unchanged at a record-high 12 percent when it last met on Nov. 21. It increased the rate 2.75 percentage points in October after inflation climbed above the bank’s 10 percent target.
Ghana’s cedi retreated 0.4 percent to 1.7245 per dollar, as of 9:30 a.m. in Accra, the capital, according to data compiled by Bloomberg. That’s the lowest level since at least 1994, when Bloomberg began tracking the currency.
To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
