Nigeria c.bank asks lenders to bid for dollars in attempt to prop naira

 

Nigeria's central bank has asked 21 commercial banks to bid for $2 million each, as it did the previous day, selling dollars onto the foreign exchange interbank market to try to support the country's ailing naira currency.

Dealers said the currency weakened early on Thursday to a fresh intraday low of 173.95 naira per dollar before central bank intervened. It then recovered to 172.60 naira but was still down 2.85 percent from the previous day's close.

Despite interventions, the naira has continued to close well above the central bank's trade band of 150-160 - a range it burst out of in May and which appears to have become merely cosmetic.

Nigerian naira slips on strong foreign demand for dollars

 

Nigeria's Naira currency weakened slightly on the interbank market on Tuesday due to strong demand for dollars from foreign investors.

The local currency closed at 168.40 to the dollar, compared with 168.20 the previous day.

Traders said the central bank had intervened in the market to buy naira, providing some support, but not enough to lift the currency, adding that they said they expected the interventions to continue, and to provide dollar liquidity.

Traders also said two energy firms had sold dollars, but not enough to push up the naira. They said Saipem - a local unit of Italy's Eni - sold $10 million, while Chevron sold $45.5 million.

Nigeria's forex reserves hit 4-month low of $37.9 bln

 

Nigeria's foreign exchange reserves fell to a 4-month low of $37.9 billion as of Nov. 7, down 3.99 percent month-on-month after the central bank sold dollars to banks to prop up the value of the naira currency.

Data published by the central bank on Tuesday showed the reserves were at $39.55 billion on Oct. 10. In July they stood at $37.89 billion.

It would be recalled that Nigeria's central bank last week said it will continue to defend the local currency, which has fallen 6 percent so far this year on concerns about lower oil prices and an exit from the local debt and equity markets by offshore investors.

Inflation eases to 8.1 percent in October

The national bureau of statistics says consumer price inflation eased for the second consecutive month to 8.1 percent in October, from 8.3 percent the previous month, driven by lower food prices, food prices, the biggest contributor to headline inflation, declined to 9.3 percent last month, down from 9.7 percent in the previous month.

The bureau of statistics said in a statement, that the highest price increases were recorded in the coffee, tea and cocoa; fish, dairy, and fruit groups.

Consumer inflation in Africa’s largest economy and top oil exporter rose from 8 percent in May, creeping up from a five-year low of 7.8 percent last October as food prices rose. The central bank has said it wants to maintain inflation within a target of between 6 to 9 percent.

Analysts welcomed the drop in inflation, and said the bank will take it into account at the next monetary policy meeting in two week time, with a focus on the weakening naira currency, which has lost 6.4 percent so far this year, pressured by the decline in global oil prices.

The statistics office said Nigeria attracted $6.5 billion in foreign investments in the third quarter, up 48.1 percent from a year ago, with more than half of inflows going into the stock market.

Nigeria’s main stock index shed 11.5 percent in one week to 33,225 points on Friday as pressure on the local naira currency persisted owing to the decline in the oil price, unnerving foreign investors, the major buyers of local shares.

Lafarge Nigeria unit to take complete control of United Cement

 

A Nigerian unit of France's Lafarge said on Monday it had entered into an agreement with Flour Mills of Nigeria to purchase a 30 percent stake in United Cement Company of Nigeria.

The deal will give Lafarge's Nigerian Cement Holdings complete control of the country's third-largest cement manufacturer.

Lafarge said in a statement that pursuant to the agreement, a first 15 percent tranche would be acquired in the first quarter of 2015, while the second 15 percent tranche is scheduled to be acquired by February 2016.

Nigeria Steps Up to Try to Halt Currency’s Slide

The naira is plunging in response to falling oil prices and despite Central Bank action.

Nigeria’s central bank intervened to support its currency after a record-breaking slide, traders said.

IUt would be recalled that the apex bank stepped in Friday to buy the currency after the U.S. dollar shot up to more than 172 naira, traders said, marking an all-time low for the Nigerian currency. The move lower is being driven by concerns that tumbling oil prices would hit Africa’s biggest economy hard. Nigeria is Africa’s top oil producer.

Late Friday in New York, the naira recovered to 166.180 against the dollar, compared with 170.215 naira late Thursday. The central bank didn’t respond to requests for comment.

Analysts are warning of a self-reinforcing slide in the currency ahead.

The bank also limited the amount of money lenders can deposit in the bank’s Standing Deposit Facility to 7.5 billion naira, or about $45 million. That regulation should boost the amount of naira between banks, traders said.

But Nigeria’s foreign-currency reserves recently stood at $39.5 billion, much smaller than Russia’s $454 billion as of the end of September, limiting Nigeria’s ability to hold back the decline.

Other corners of Nigerian markets also felt the heat. Nigeria’s All-Share Index dropped 3.7% to its lowest point in nearly 18 months, and all three of Nigeria’s outstanding dollar-denominated bonds traded marginally lower, according to Tradeweb.

The plunge in oil prices could put pressure on Nigeria’s budget just as President Goodluck Jonathan and state officials are expected to ramp up spending ahead of national elections set for February.

FG Loses 4,700MW of Electricity to Gas Shortage

Nigeria's Minister of Power, Professor Chinedu Nebo, on Monday announced that the country was still losing 4,700MW due to the unavailability of gas to fire 7,800MW space capacity, this coming barely four days after the federal government announced that for the first time in Nigeria’s history, it was generating 4,600 megawatts (MW) of electricity,

Speaking in Lagos at the pre-conference workshop of the 32nd annual conference and exhibition of the Nigerian Association of Petroleum Explorationists (NAPE), Nebo said of the 7,800MW available in the gas-fired power plants, the gas plants in the Niger Delta provide only 880 million standard cubic feet per day (mmscf/d) of gas to fuel the generation of 3,100MW daily.

Before the recent 4,600MW-peak, the country’s highest electricity output was recorded on December 23, 2012 at 4,517.6MW.

According to Nebo, 1.9 billion cubic feet per day of gas (bcf/d) would be required to generate the 7,800MW available capacity, adding that with the 880mmscf/d gas that is available, there is a gas supply deficit of one billion cubic feet per day.

Nebo, who spoke on “The Challenges to Developing Sustainable IPP Projects in Nigeria”, reiterated that Nigeria’s current daily power output was about 4,000MW but 3,100MW of this is fuelled by about 880mmscf/d of gas.

He advised the new investors in the power sector to immediately begin the implementation of their respective business plans to reduce losses and recover unutilised capacities.