The
currency was trading down 2.4 percent from Friday’s closing level.
The
central bank has struggled to keep the naira within its preferred band even
after devaluing the currency by 8 percent last Tuesday in a bid to halt a
decline in the foreign reserves of Africa’s biggest economy. Oil sales provide
around 95 percent of those reserves.
The
bank’s target band after devaluation is
5 percent plus or minus 168 to the
dollar, but doubts remain about whether it went far enough given the likelihood
of continuing low oil prices and the fact that Nigeria’s oil savings were being
depleted even during a period of record high crude prices.
The
coming weeks will test the bank’s ability to maintain that level — the naira is
trading well below it and forex reserves are running out.
Pressure
on the currency from lower oil prices risks reigniting inflation, which has
stabilised in single digits for the past two years, the first time it has been
this low.
Nigeria’s
economic troubles come at a bad time for President Goodluck Jonathan, who will
seek re-election in polls scheduled for Feb. 2015.
Barclays
on Monday lowered its expected average Brent crude price to $72 a barrel for
2015, down from $93 a barrel previously, in a sign analysts have become more
bearish following last week’s OPEC meeting, which left supply targets
unchanged.
Reuters
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