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Naira Declines On Bets Of Further Weakening

By on June 14, 2012

The naira retreated as speculation Nigeria’s currency would weaken further offset the biggest sale of dollars in four months.

The currency of Africa’s top oil producer fell as much as 0.9 percent to 164.20 per dollar in theinterbank market, its weakest since Dec. 27 before trading 0.1 percent lower at 162.915 by 3:50 p.m. in Lagos yesterday, according to data compiled by Bloomberg.

“The market is witnessing higher dollar demand, including those from dealers increasing their position in anticipation that the currency may decline further,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said by phone.

The naira pared losses after Nigeria sold $400 million at a foreign-currency auction today, the most since Feb. 8 sales, at 155.90 per dollar, the Abuja-based Central Bank of Nigeria said today in an e-mailed statement. The regulator sells the U.S. currency at auctions and direct to lenders at interbank trading to stabilize the naira.

Increased dollar sales by the central bank, “have certainly helped the naira,” Leon Myburgh and Coura Fall, Africa strategists at Citigroup Inc. in Johannesburg, wrote in an e-mailed note to clients yesterday. The weakening of the naira “will be reduced in coming weeks with support from the central bank.”

The yield on Nigeria’s domestic bonds due 2015 rose one basis point to 15.71 percent, according to the June 12 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 fell two basis points to 5.523 percent.