BLBG:Naira Declines 1st Day in Five on Bets of Oil Dollar Decline
Nigeria’s naira declined for the first time in five days against the dollar on speculation oil industry dollar sales will decline, putting the local currency under pressure.
The currency of Africa’s largest oil producer declined 0.2 percent to 159.15 per dollar as of 12:40 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
Nigeria’s central bank offers foreign currency to lenders at twice-weekly auctions and the interbank market as it tries to keep the exchange rate around a midpoint of 155 naira to a dollar. The oil industry is the next major source of dollar supply to lenders, particularly around the month-end when companies exchange dollar earnings for naira to meet local obligations. The naira appreciated at the interbank foreign exchange market last week on the back of dollar sales by oil companies, analysts at Lagos-based Cowry Asset Management ltd. said in a note to clients today.
“Traders are expecting a slowdown in oil industry dollar sales halfway in the new month, creating uncertainly on the supply side of the market,” Sewa Wusa, currency analyst at Lagos-based Sterling Capital, said by phone. The central bank may not be able to meet the additional demand, putting the naira under pressure, he said.
The central bank would like to keep the exchange rate stable after lowering its band against the dollar last year, Governor Lamido Sanusi said Jan. 31. The regulator kept its benchmark interest rate unchanged at a record high for a second consecutive meeting on Jan. 31, to curb inflation after the government partially removed fuel subsidies, boosting gasoline costs.
There may be increased demand for the dollar this week as there was only one auction last week because of a public holiday, Cowry Asset Management analysts said. The central bank will hold its twice-weekly foreign currency auctions today and on Feb. 15.
Ghana’s cedi strengthened less than 0.1 percent to 1.7079 per dollar, according to data compiled by Bloomberg.
To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net
To contact the editor responsible for this story: Robert Brand at rbrand9@bloomberg.net
