Naira declines to month low on waning dollar sales

JOHNSON OKANLAWON WITH AGENCY REPORT The naira fell the most in a month against the dollar, snapping two days of gains, on speculation that sales of the United States currency by companies in West Africa’s biggest economy eased.

The currency retreated 0.3 per cent, the most since July 23 on a closing basis, to N161.70 per dollar on Wednesday.

The naira has declined 3.4 per cent against the dollar this year.

Oil companies, which sell the US currency mainly at the month’s end to pay domestic expenses, are the secondbiggest supplier of dollars after the Central Bank of Nigeria (CBN).

The CBN auctions foreign exchange on Mondays and Wednesdays. It sold $548.4 million this week, from $521.6 million in the previous five days.

The Head of Research at UBA Capital, Mr. Abiola Rasaq said, “We’ve not seen significant flows from the oil majors. 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.

According to him, while buyers had been getting more of these offers in recent months, there has not seen so much of that over the last two to three weeks.

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

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