Naira Tumbles to Record as Yields Rise on Nigeria Election Delay
by Emelu Onu
(Bloomberg) — Nigeria’s naira fell to a record against the dollar, stocks dropped and bond yields rose after the West African nation postponed elections, increasing risks in an economy already under pressure from the slump in oil prices.
The naira declined 1 percent to 195.95 per dollar as of 11:43 a.m. in the commercial capital, Lagos, depreciating for a sixth day to the weakest level since Bloomberg started compiling the data in January 1999.
Nigeria’s electoral commission said at the weekend presidential and parliamentary elections scheduled for Feb. 14 would be moved to March 28 because of insecurity fears due to escalating attacks by the Islamist group Boko Haram. Support for President Goodluck Jonathan, who is facing opposition from All Progressives Congress candidate Muhammadu Buhari, has been dwindling as the oil price collapse curbed revenue of Africa’s biggest crude exporter.
“This is just going to increase the uncertainty in Nigerian markets,” Ridle Markus, a strategist at Barclays Plc’s South African unit, said by phone from Johannesburg. “While the increased violence is a big concern, investors’ more immediate focus has been on the impact of lower oil prices on the currency and public finances. They need to get some sense of where this currency is heading to make a good judgment call on investments.”
The 195-member Nigerian Stock Exchange All Share Index dropped 0.4 percent today, extending its decline this year to 14 percent, the worst performance in the world after Ukraine. Yields on Nigeria’s $500 million of Eurobonds due July 2023 climbed 23 basis points, the most since Jan. 6, to 7.37 percent.
Boko Haram, which seeks to impose Islamic law in Africa’s biggest economy, killed more than 4,700 people last year, twice the number who died in 2013, according to estimates from U.K.- based risk consultancy Verisk Maplecroft.
The naira has slumped 17 percent against the dollar in the past six months, the most among 24 African countries tracked by Bloomberg. The currency could fall as low as 200 per dollar today, Kunle Ezun, an analyst at Ecobank Transnational Inc., said by phone from Lagos.
The Central Bank of Nigeria, which is scheduled to sell foreign currency at an auction today, may also sell dollars directly to lenders to support the naira, Ezun said.
To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net