The naira slumped to a record low against the dollar as oil prices fell and before Nigeria’s central bank meeting to review interest rates.
The currency fell 1.9 percent to N177.17 per dollar in Lagos, a fourth day of declines. The naira has weakened 7.4 per cent this quarter, the third worst out of 24 African currencies monitored by Bloomberg.
Crude oil, exports of which account for 70 per cent of Nigeria’s income, traded below $75 a barrel for West Texas Intermediate as U.S. inventories increased and investors weighed the likelihood of the Organization of Petroleum Exporting Countries reducing its production. The Central Bank of Nigeria may lift borrowing costs next week to support the naira, according to ETM Analytics.
“Expectations are rising that the bank will throw in the towel and hike policy rates given the seeming futility of trying to keep the naira from depreciating,” Gareth Brickman, a Johannesburg-based Africa analyst at ETM, said in a note to clients.
The central bank will give its rate decision on November 25. Policy makers left the benchmark rate unchanged at 12 percent on September 19 even as consumer prices accelerated for a sixth month in August. The inflation rate slowed to 8.1 per cent in October, from 8.3 per cent the previous month.