THE Central Bank of Nigeria (CBN) will probably lower its targeted trading
range for the naira as dwindling foreign-exchange reserves and falling oil
prices undermine its ability to halt the currency’s slide.
According to analysts at Lagos-based FBN Capital, Gregory Kronsten, policy
makers may adjust the exchange rate to within a 3 percentage-point band of
N160 per dollar from N155 over the next six to nine months.
The naira breached the target for the first time on a closing basis on June 7
and has ended trading above the peg each day since June 25 for a decline
of 3.1 percent this year, according to data compiled by Bloomberg.
The naira traded above the band for the first time on a closing basis on June
7 on the interbank market and has ended trading above the peg each day
since June 25. Nigeria’s central bank, which sells dollars at auctions on
Mondays and Wednesdays to support the naira, sold $700 million last week,
compared with $600 million the previous week, at 155.76 to 155.79 per
dollar.
CBN Governor, Lamido Sanusi, in November 2011 devalued the midpoint of
the bank’s exchange-rate range at its twice-weekly auctions from N150
naira. External reserves have declined more than 2 percent this month to
$46.9 billion on July 18 as the apex bank boosted sales to meet demand
amid declining oil prices, the source of more than 95 percent of Nigeria’s
foreign exchange income.
The naira strengthened less than 0.1 percent to 161.18 per dollar as of
10:56 a.m. in Lagos. The currency has weakened 3 percent this year
compared with a 0.5 percent decrease in the currency of Angola, which vies
with Nigeria as Africa’s top oil producer.
CBN’s Spokesman, Ugochukwu Okoroafor, was not available for comment
when contacted.
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