Naira Weakens, Extends Biggest Weekly Drop

The naira weakened against the dollar, extending its worst weekly performance in a year, amid speculation the state-owned oil company sold limited foreign-exchange to the market.

According to London-based emerging markets strategist at Standard Bank Group Limited, Samir Gadio, the currency fell for a fourth day as dollar sales from Nigerian National Petroleum Corporation (NNPC) were less than expected.

Mr. Gadio said, “The naira weakened amid less significant than expected NNPC flows, weaker confidence and limited capital inflows. It is likely that the Central Bank of Nigeria will intervene in the market in the near term and sell dollars directly to the banks to defend its nominal monetary policy anchor.”

Yields on domestic bonds due January 2022 rose to their highest since October on Thursday, according to data compiled by Bloomberg.

Oil companies, including the NNPC, are the second-biggest source of dollars after the CBN, which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability.

The country’s currency weakened as much as 0.4% before trading 0.3% lower at ₦159.35 per dollar. This extended its weekly decline to 0.7%, the biggest fall since the five days through June 8, 2012. The yield on the 2022 securities rose 38 basis points, or 0.38% point, to 13.33% on Thursday, the highest since October 30, according to the data compiled by Bloomberg.