Naira Slips to 7-Week Low at Sale as Dollar Demand Outpaces Supply

Nigeria’s naira depreciated to a seven-week low against the dollar at a foreign-currency sale today, after the central bank failed to meet lenders’ demand for the U.S. currency for a 12th straight auction.

The currency of sub-Saharan Africa’s second-biggest economy declined 0.2 percent to 151.35 naira per dollar at the auction, its weakest since the June 29 sale. It retreated 0.1 percent to 153.90 naira per dollar in interbank trading by 4:51 p.m. in Lagos, according to data compiled by Bloomberg.

The central bank sold $350 million compared with $475.7 million demanded by lenders, according to data published by the Abuja-based central bank on its website.

Africa’s biggest oil producer has been using foreign currency reserves to keep naira within a 3 percentage-point band above or below 150 naira per dollar at its bi-weekly auctions to help check inflation.

“What the central bank offers is insufficient, leading to naira depreciation” Tayo Omidiji, head of research at Lagos- based Sterling Capital Ltd., said by phone. “Besides the traditional dollar demand for refined petroleum and industrial- goods imports, there is increasing demand to meet hajj and summer-holiday commitments.” The hajj is an annual pilgrimage undertaken by Muslims to Mecca in Saudi Arabia. The West African nation is home to about 78 million Muslims.

Bloomberg