Naira weakens as CBN reduces dollar supplies

The naira depreciated to the lowest in almost a week as the Central Bank of Nigeria (CBN) offered fewer dollars at an auction, offsetting its decision to hold the key lending rate at a record high to support the currency.

The fell 0.2 per cent to N158.95 per dollar, according to data compiled by Bloomberg.

The apex bank sold $280 million at a foreign- currency auction yesterday, less than the $300 million given out at the previous sale on March 18, it said in an e-mailed statement. The Monetary Policy Committee kept its benchmark interest rate at a record high of 12 per cent for a ninth consecutive meeting on Tuesday to support the naira.

“Traders reacted to lower dollar supply by the CBN amid rising demand,” Sewa Wusu, an analyst at Lagos-based Sterling Capital Limited, said by phone. “The policy rate should boost naira overtime as it checks liquidity of the local unit.”

In the next week, the naira should trade at about N158.7 per dollar with monetary policy support, Kunle Ezun and Kenneth Asenime, analysts at Ecobank Transnational Incorporated in Lagos, wrote in an e-mailed note to clients today.

The yield on the country’s 16.39 per cent domestic bonds due January, 2022, declined 34 basis points to 11.26 per cent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website.

Yields on the $500 million of Eurobonds due January 2021 declined 10 basis points to 4.232 per cent.



-- The Nation