Nigeria Sells $400 Million at Auction as Naira Weakens

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Nigeria sold $400 million at a foreign-exchange auction today, less than the $478.8 million requested by lenders, as it tries to keep the naira in a range to control inflation.

Dollars were sold for between 153.47 naira and 153.09 naira each, the Central Bank of Nigeria said on its website today. The marginal rate, which is also used as the prevailing exchange rate, was 153.38 naira, compared with 153.18 naira at the Abuja-based bank’s previous auction on June 15.

The naira has weakened in four out of six auctions this month as the central bank failed to meet the demand of dealers.

“The depreciation at the official auction was due to excess demand not met by the regulator,” Tayo Omidiji, Head of Research at Sterling Capital Ltd., said in a phone interview from Lagos.

The West Africa nation’s currency closed stronger at the interbank market, gaining 5 kobo, or 0.03 percent, to 156.60 naira to a dollar.

The central bank needs “to continuously meet dollar demand to discourage speculation and the naira will appreciate,” said Wale Abe, Chief Executive Officer of the Financial Markets Dealers Association in Lagos.

Nigeria’s central bank has been defending the currency of Africa’s top oil producer, keeping it within 3 percent above or below 150 per dollar, in a bid to curb inflation.

The marginal rate at today’s foreign-exchange auction represents 2.25 percent devaluation from the target 150 naira rate.

— Editor: Fergal O’Brien

To contact the reporter on this story: Emele Onu in Johannesburg at eonu1@bloomberg.net

To contact the editor responsible for this story: Ana Monteiro at amonteiro4@bloomberg.net

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