Naira: worst rout in five years

Nigeria’s currency suffered this February, its biggest monthly fall in over five years coinciding with Goodluck Jonathan’s presidency.

Forex Dealers said blame concerns over political uncertainty and the central bank’s ability to manage a currency hammered by weak oil prices, as being responsible for the unprecedented rout of Nigeria’s currency.

The naira shed 8.3 percent to the dollar in February, dealers said, worse than a 6.9 percent fall in November after central bank devalued the currency by 8 percent in order to save its foreign reserves.

However, reserves have fallen steadily and were down 8.6 percent by February 26 from a month ago, to stand at $31.46 billion after central bank stepped up support for the currency.

The naira closed at 202 on the interbank market on Friday, a level it broadly traded at this week, dealers said.

A sale was carried out on Friday just before the interbank market closed, at 198 naira for $82.9 million, Thomson Reuters data showed. Dealers attributed the trade to a dollar sale by the central bank.

At its weakest, the naira was quoted at a record low of 206.60 to the dollar earlier this month, a decline of 20 percent since the start of November.

The naira crashed through a psychologically important level of 200 to the dollar this month in a rout triggered by weak oil prices and escalating tension over the postponement of a presidential election in Africa’s top oil producer, prompting the central bank to scrap its bi-weekly forex auctions.

The local unit of Mobil asked commercial lenders to bid for $15 million on Friday, as the firm sought to buy naira to meet its local obligations, dealers said. The results of the bidding are due out on Monday.

The central bank scrapped its bi-weekly currency auctions this month and a market body said it would sell dollars only at 198 naira, a move that amounts to a de facto devaluation of the naira.

*Reuters