Naira heads for three-week low

The naira headed for its weakest level
against the dollar since July 23 as demand
increased before the Central Bank’s second
foreign-exchange auction of the week.
The currency yesterday retreated 0.2 per cent
to N160.85 per dollar, the lowest on a closing
basis in more than three weeks. It weakened
2.9 per cent this year, the worst in West Africa
after the Ghanaian cedi and Liberian dollar,
among 24 of the continent’s currencies tracked
by Bloomberg.
The Central Bank of Nigeria (CBN) sold $221.6
million on August 12, the lowest since May 15.
The regulator is the biggest supplier of the
dollarn and offers foreign exchange at a target
of plus or minus three per cent of N155 per
dollar.
“Importers that couldn’t meet their demand
for dollars at the auction are resorting to the
interbank market, thereby putting the naira
under pressure at that window,” Kunle Ezun, an
analyst at Ecobank Transnational Incorporated,
(ETI), said in Lagos, yesterday that an increase
in CBN’s supply will reduce the pressure.
The CBN’s Monetary Policy Committee left its
benchmark interest rate at a record 12 per
cent for an 11th consecutive meeting on July
23 to protect the naira. It introduced a 50 per
cent cash reserve requirement on public-sector
funds after warning about the risk of excess
liquidity.
Yields on Nigeria’s $500 million Eurobonds due
January 2021 were little changed at 5.48 per
cent. Borrowing costs on local-currency debt
due January 2022 rose six basis points, or 0.06
percentage point, to 13.09 per cent on
Tuesday, according to data compiled by
Bloomberg. Ghana’s cedi was unchanged at
2.0950 per dollar in the capital, Accra.