Currency down 10 pct yr/yr, stocks fall 17 pct

January 1, 2016 8:00 AM

Nigeria, Africa's top crude oil exporter and biggest economy, has rejected calls to devalue its currency, saying the naira "is appropriately priced" at the prevailing level.

Nigeria Stock Exchange

The Nigerian naira closed little changed against the dollar on both the parallel and interbank market on Thursday, while the stock index rose and the interbank rate remained at 1 percent for overnight lending.

The local currency closed on the interbank market at 199.50 to the dollar on Thursday, compared with 181.50 to the dollar a year ago, down 9.91 percent at the official window. On the parallel market, the naira traded at 266 to the dollar, weaker by 39.26 percent from 191 to the dollar at the close last year.

The stock market rose 3.11 percent for the day. But it ended down 17.35 percent for the year.

The central bank had pegged the naira exchange rate at 198 to the dollar in February and scrapped a two-way interbank quote as global oil prices fell, to conserve foreign exchange reserves.

Also in June, the central bank introduced more foreign exchange limits, excluding about 41 items from access to foreign exchange at the official window to further reduce pressure on available dollars.

Nigeria's foreign exchange reserves stood at $29.10 billion by Dec. 30, down 15.62 percent from a year ago after efforts to support the local currency.

Nigeria, Africa's top crude oil exporter and biggest economy, has rejected calls to devalue its currency, saying the naira "is appropriately priced" at the prevailing level.

Cost of borrowing remained held at 1 percent for overnight lending on Thursday, better than around 10.33 percent last year because of increased liquidity.

Market liquidity was around 955 billion naira on Thursday, in spite of efforts by the central bank twice this week to reduce the level by sales of Open Market Operation bills.

The bank sold about 199 billion naira of short-dated OMO treasury bills twice this week to drain liquidity and reduce pressure on the naira.