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Naira falls to four-month low

By on January 29, 2014

The naira fell for a fourth day after the Central Bank of Nigeria removed limits on how many dollars can be sold to foreign-exchange bureaus, driving demand for the United States currency.

According to a Bloomberg report, the currency of Africa’s second-biggest economy retreated as much as 1.6 per cent to 163.21 per dollar, the lowest on an intraday basis since September 18, before trading one per cent down at 162.30 in Lagos.

Without intervention by the CBN, it may retreat to 165 per dollar this week, said an analyst at the Ecobank Transnational Inc, Mr. Kunle Ezun, in Lagos.

The CBN removed the weekly limit of $250,000 that could be sold to a currency changer to “shore up liquidity in that segment of the foreign-exchange market,” it said in a statement on its website dated January 24.

The central bank is concerned that a widening gap between interbank and bureaux de change rates may precipitate speculation, the CBN Governor, Mr. Lamido Sanusi, has said.

In September, the bank banned imports of foreign currency by lenders without approval.

“The BDCs are making more dollar demands on banks,” Ezun said on the telephone from Lagos, adding, “Many banks on the other hand don’t have sufficient dollar liquidity as a result of central bank’s rule in September that banned the importation of cash without approval.”

Nigeria sells foreign currency at twice-weekly auctions to shore up the naira, which has dropped 3.7 per cent since the start of 2013. The bank also sells dollars directly to lenders as sporadic intervals.

 

 

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