The naira weakened to N202.50 to a dollar for the first at the interbank market as the nation’s election postponement increased the likelihood that the continent’s worst-performing currency will be devalued.
The naira has tumbled 17 percent over the past three months, the most among 24 currencies tracked by Bloomberg. It may depreciate to N263, prices on 12-month forward contracts show, according to Bloomberg.
“Traders are seeing higher uncertainties in the market with the postponement of the election,” Lanre Buluro, head of research at Primera Africa Securities Limited said.
“There is speculation on the naira with many buying dollars in anticipation of imminent devaluation before the election or after.”
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Investors are delaying decisions to commit money to Nigeria as escalating violence by the Islamist group Boko Haram in the country’s north-eastern region prompted the electoral commission to push back the vote by six weeks to March 28.
The naira is “on a runaway train” with the market shrugging off intervention attempts by the central bank, Gareth Brickman and Catherine Bennett, Johannesburg-based market analysts at ETM Analytics, said in an e-mailed note.
“The bank’s attempts at managing the exchange rate remain nothing short of futile.”
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Nigeria’s central bank has reduced foreign-exchange reserves to a three-year low in a bid to defend the naira with dollar sales.
In November, policy makers weakened the midpoint of the official exchange rate to N168 per dollar, from N155 and raised the benchmark borrowing cost to a record 13 per cent to stem losses in the currency.
“At this point the market has once again priced in a de facto devaluation for the bank to catch up to,” the ETM analysts wrote.
“Policy makers have remained exceptionally stubborn in reconciling the reality of the situation and more unpredictable and unconventional policy changes cannot be discounted.”
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The central bank sold an undisclosed amount of dollars in the market to try and keep the naira below N200, Kunle Ezun, an analyst at Ecobank said.
Yields on Nigeria’s $500 million of Eurobonds due July 2023 climbed 10 basis points to 7.48 percent, the highest since February 2.
“The naira is becoming a campaign tool for the opposition party, the authorities will want to do everything to provide support,” said Primera’s Buluro.
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3 comments
there is nothing any one can do it the work n happiness of pdp administration in the country.
God pls save this country from PDP.
Wo onto pdp