Naira Declines to Month Low on Waning Dollar Sales

The naira fell the most in a month against the dollar, snapping two days of gains, on speculation that sales of the U.S. currency by companies in West Africa’s biggest economy eased.

The country’s currency retreated 0.3 percent, the most since July 23 on a closing basis, to 161.70 per dollar by 3:03 p.m. On 22 August, 2013 in Lagos, the commercial capital. The naira has declined 3.4 percent against the dollar this year.

Oil companies, which sell the U.S. currency mainly at the month’s end to pay domestic expenses, are the second-biggest supplier of dollars after the Central Bank of Nigeria. The Abuja-based institution auctions foreign exchange on Mondays and Wednesdays. It sold $548.4 million this week from $521.6 million in the previous five days.

“We’ve not seen significant flows from the oil majors,” Abiola Rasaq, head of research at UBA Capital, said by phone today from Lagos. “This is a period when oil companies should be selling dollars to fund their naira obligations.”

The central bank occasionally sells dollars directly to lenders on the interbank market outside of its weekly auctions. While buyers had been getting more of these offers in recent months, “we’ve not seen so much of that over the last two to three weeks,” Rasaq said.

Borrowing costs on Nigeria’s domestic bonds due January 2022 fell three basis points, or 0.03 percentage point, to 13.58 percent, according to yesterday’s data compiled by Bloomberg.

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