Nigeria intervenes to prop up naira

A man walks past a promotional banner showing a photograph of a pile of Nigerian naira along a road in Lagos in this file picture.

A man walks past a promotional banner showing a photograph of a pile of Nigerian naira along a road in Lagos in this file picture.

Published Nov 27, 2014

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Lagos - Nigeria's central bank intervened in the market with dollar sales on Thursday to try to keep the naira within a preferred band since it was devalued two days earlier, dealers said.

The local unit closed up 1.4 percent at 174.30 to the dollar in volatile trade.

It had earlier lost around 0.33 percent in intraday trading, breaching the lower end of the bank's target band of 5 percent plus or minus 168.

Nigeria's currency touched a record low against the dollar on Wednesday, a day after the central bank devalued it by 8 percent in a move thought likely to complicate efforts to contain inflation in Africa's biggest economy.

The bank's decision to devalue, less than three months before a presidential election, was praised by economists as a bold move, but there remains a debate about whether or not it went far enough.

Africa's leading energy producer is contending with a 30 percent fall in world oil prices since June and has spent billions of dollars of its foreign exchange reserves trying to defend the naira at what markets perceived to be an unrealistic level.

According to its website, Nigeria's central bank has spent an average of $27.9 million (R307 million) a day this year defending the naira, but it has still shed 11 percent over the same time period.

The coming weeks will test its ability to maintain the currency within its new target band. - Reuters

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