The Central Bank of Nigeria sold dollars directly to lenders outside of its regular currency auctions to meet demand and stabilize the naira, which gained today to pare a quarterly depreciation.
“We do the auction, and when we see the interbank market going haywire, we intervene to bring the market to equilibrium,” Charles Mordi, director of research at the Abuja-based central bank, said in an interview in Lagos, the commercial capital. People may be seeking dollars because of uncertainty about elections in February and a falling oil price, he said, declining to say how much was sold.
Demand for dollars in Africa’s largest economy and oil producer helped push the naira 0.4 percent lower in the three months through September. The central bank’s auctions on Mondays and Wednesday are the biggest source of foreign exchange in the country, followed by currency sales from oil companies.
The naira reversed a decline of as much as 0.8 percent against the dollar today to trade 0.1 percent stronger at 163.65 by 2:48 p.m. in Lagos. The central bank keeps the naira at 3 percent above or below 155 per dollar at its twice weekly auctions to lenders and money-changers.
President Goodluck Jonathan hasn’t said whether he would seek a second term in office in next year’s vote. Oil output has stayed below the country’s 2.4 million barrel-a-day capacity this year, according to data compiled by Bloomberg.
The bank is still in a “comfortable position” to defend the naira with the level of external reserves and investment inflows, Mordi said. Nigeria’s gross reserves have fallen 9.3 percent this year to $39.56 billion by Sept. 26.