Home Business & Economy Naira hits record low despite intervention

Naira hits record low despite intervention

Naira shed 0.76 percent on Friday to close at a record low against the greenback, despite the central bank intervening for a fifth day with dollar sales to prop up the currency.
The unit closed at N177.45 to the dollar, weaker than Thursday’s close of N176.10. It had initially weakened to N177.12, prompting the central bank to ask 21 commercial lenders to bid for $2 million apiece.
The bank has been selling $150 million to $200 million in each intervention, depleting its foreign reserves, dealers said.
According to the dealers, “The demand for dollars out there is quite serious. The market is absorbing all central bank intervention and the naira is still depreciating. “We had Foreign Portfolio Investments (FPI) inflows in the past which has dried up.
Foreign investors have increased the pace of outflows from Nigerian assets since August, selling out of the equity and debt markets as the price of Brent crude, the benchmark against which Nigeria’s oil is sold, dropped.
Investors pulled out N101.2 billion ($583.6 million) from the stock market in October.
“Demand for dollars mainly from importers buying foreign-made consumer goods and electronics to sell in Africa’s most populous country, especially ahead of the Christmas holiday, is putting pressure on the naira, dealers said.
Nigeria imports almost 80 percent of what it consumes. Dealers said foreign inflows into the local bond and stock markets had helped augment central bank dollar sales in the past but have now dried up.
The main share index has lost 19 percent so far this year.
Some importers have also brought forward their dollar obligations as risks to Africa’s biggest economy increase ahead of elections next year and as oil prices fall, dealers said. (Reporting by Chijioke Ohuocha; Editing by Catherine Evans)

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