• Monday, July 22, 2024
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Naira falls to 5-week low on oil-imports demand, fewer dollars

The naira declined for a fifth day on Monday, reaching its lowest in more than five weeks on increased demand for dollars by oil importers and as the central bank cut the amount of US currency sold at its weekly auction.

The currency of Africa’s biggest oil producer weakened 0.1 percent to N158.83 per dollar as of 2:55 p.m. in Lagos, the commercial capital, the lowest on a closing basis since March 14, according to data compiled by Bloomberg.

Nigeria relies on imports to cover 70 percent of the fuel needs in Africa’s second-biggest economy because of inadequate refining capacity.

Those shipments into the country are a source of pressure on the naira, according to the Central Bank of Nigeria.

The Abuja-based bank sold $246.5 million at an auction Monday, compared with $266.2 million at the previous sale on April 17, it said in an e-mailed statement.

Read also: Nigeria Naira Plunges to Record Low, Falling for 9th Straight Year

The naira weakened “on huge dollar demand by oil importers,” Access Bank analysts led by Tony Monye and Michael Ndiomu wrote in a note.

The drop in the central bank’s supply also added pressure on the naira, Tunde Ladipo, chief executive officer of Lagos-based Value chain Investment Ltd., said.

Borrowing costs on the nation’s local-currency debt due January 2022 fell four basis points, or 0.4 percentage point, to 11.44 percent, according to April 19 prices on the Lagos-based Financial Markets Dealers Association website.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell three basis points to 4.04 percent.