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Naira Drops on Reduced Dollar Sales

11 Dec 2012

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Naira, Dollar notes

The naira depreciated against the dollar Monday as traders speculated that oil-producing companies will reduce dollar sales in the middle of the month.

The Central Bank of Nigeria (CBN) sold $80 million to dealers, same amount it offered at last Wednesday’s auction.

Bloomberg reported that the naira declined as much as one per cent to N158.60 per dollar, weaker than the N156.98 as at 12:44 pm yesterday. The naira climbed to N156.95 a dollar on December 7 as the Nigerian National Petroleum Corporation sold about $450 million to lenders.

Oil producers that sell dollar around month-end to meet domestic expenses are the second- biggest source of forex after the central bank, which holds scheduled auctions on Mondays and Wednesdays.

“Dealers want to buy the dollar at the region of N156.95 it traded last Friday in anticipation they can’t get it at a better rate this week,” Chief Executive Officer of Valuechain Investment Limited, Tunde Ladipo, said.

CBN Governor, Mallam Sanusi Lamido Sanusi, restated last week that the monetary tightening policy had largely achieved its objectives of stabilising the naira and taming inflation, which were less of a worry than four months ago. Sanusi had also reiterated his concern that oil prices could fall due to global economic uncertainty, posing risk for the country.

"It is clear the objectives we set for ourselves when we tightened have been largely achieved," Sanusi said, adding that "We have stabilised the exchange rate and we have stopped inflation from spiking. Core inflation has come down for the fourth consecutive month."

"There are underlying widespread pressures on imported food inflation. But in terms of where we were four to five months ago, the concerns are more muted," Sanusi said.

Tags: Business, Nigeria, Featured, Naira, Dollar

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