NAIROBI, Sept 29 – Nigeria’s naira is likely to hit record lows at the interbank market next week amid a dollar shortage in Africa’s biggest oil producer, while Kenya’s government is set to announce more measures to prop up the battered shilling.
NIGERIA
The naira fell to an all-time low of 159.10 to the dollar on Thursday and is expected to fall further next week as strong demand for the dollar persists against limited supply.
The currency closed at 158.45 to the dollar on the interbank market on Wednesday despite an attempt by the central bank to raise supply at its bi-weekly auction and allowed the naira to appreciate at the official window.
The central bank sold $700 million at 154.60 to the dollar at its bi-weekly forex auction on Wednesday, its highest single sale this year, and against the $703.05 million demanded.
However, traders were sceptical about the regulator’s intentions to defend the naira, which fell beyond a target band of 150 naira +/-3 percent at the previous auction.
“The market is watching to see if this is a one-off thing or the central bank will show seriousness in the subsequent auction in defending the naira currency,” one dealer said.
Dealers said there was tight dollar liquidity, with growing demand from importers stocking up for year-end sales.
“There is no dollar liquidity yet demand remains strong so what we expect is that the naira will continue to depreciate until the next auction by the central bank on Wednesday,” another dealer said.
Traders said the naira could hit 160 to the dollar before the next bi-weekly foreign exchange auction on Wednesday unless there were fresh dollar inflows.
Source: Reuters Africa newsletter
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