The
naira touched a record low against the dollar on Wednesday, a day after the
Central Bank of Nigeria (CBN) devalued the currency, and it was trading lower
than the bank’s target band even after rebounding.
CBN
devalued the naira by 8 percent and raised interest rates sharply on Tuesday,
as it sought to stem losses to its foreign reserves from defending the currency
against weaker oil prices.
The
naira fell to a record low of 178.85 to the dollar shortly after the market
opened, but it rebounded to firm almost 1 percent to 177.05 after two oil
companies sold dollars.
That
level was still below the new bank’s target band of 5 percent plus or minus 168
to the dollar after the devaluation.
Total
sold $20 million while Shell sold an undisclosed amount of
dollars, which
helped boost dollar liquidity on the interbank market, dealers said. Dealers
also said there were market expectations that the central bank to intervene.
The
local currency had closed at 177.30 on Monday before the central bank
announcement.
Several
emerging economies have seen their currencies fall owing to hot money outflows
this year, as the U.S. Federal Reserve tapered its stimulus programme.
Currencies from economies sensitive to oil prices such as the naira and the
Russian rouble have been hardest hit.
Angola’s
Kwanza fell to a record low of 100.895 to the dollar on Wednesday.
According
to its website, the CBN has spent an average of $27.9 million a day this year
defending the naira, but the currency has dropped by 10 percent versus the
dollar anyway, on concerns that lower global oil prices are here to stay.
Central
bank Governor Godwin Emefiele told an investors’ conference call on Tuesday
that Nigeria’s foreign reserves stood at $36.5 billion, down 18.3 percent from
a year ago, depleted by efforts to support the currency.
Businessday
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