Nigerian naira weakened to a more than 10-month low on the interbank market on Tuesday as Africa’s largest economy continues to face low-dollar supply and high demand for the greenback.
The local unit depreciated 5.3% to 401 naira per dollar on the spot market, the lowest since March 30 last year, before paring losses to 397.50 as of 1:54 p.m. in the commercial capital, Lagos. The naira closed at 398.5 to the greenback on the investors’ and exporters’ window on Monday.
The West African nation’s currency has been devalued twice since March last year. Another adjustment would be in line with investors’ expectations for a devaluation after the central bank weakened the non-deliverable naira forward contracts rates and raised interest rates.
Africa’s largest crude producer has been reluctant to allow an adjustment of its currency after the oil-price crash early last year cut foreign-exchange inflows from official sources. A rebound in crude prices in recent weeks would boost the central bank’s reserves and improve dollar reserves, which have been under pressure.