Nigeria naira eases as investors repatriate dividend

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A taxi cab passes a giant advertising screen showing US dollar, British pound and euro foreign currency exchange rates on a busy city road in Lagos, Nigeria, on Wednesday, July 26, 2017. Nigeria's economy, which in 2016 suffered its first full-year recession since 1987, will probably return to growth in 2017. Photographer: Tom Saater/Bloomberg

LAGOS, May 8 – Nigeria’s naira eased to 362 to the dollar for investors on Tuesday as funds repatriate dividends abroad following the end of the earnings season and as forward currency contracts mature amid tight dollar liquidity, traders said.

The naira traded at 360 for over six months after the central bank in April 2017 liberalised the currency for investors in the wake of a currency crisis brought on by low oil prices that also slashed government revenues.

Traders said the currency started to weaken last week as demand piled up especially from companies seeking to repatriate dividends and investors booking profits from local assets.

Importers buying goods from abroad were also exerting pressure on the naira.

Nigeria emerged from its first recession in a quarter of a century last year but growth is still fragile. It then introduced a multiple exchange rate regime to manage dollar demand as a way to alleviate chronic shortages on the currency markets.

On the official market the naira is quoted at around 305 per dollar, a level it has been for over a year, supported by central bank’s regular interventions.

MTN’s Nigeria operation declared a dividend of 50 billion naira ($159 mln) by its local unit in 2017, a company presentation seen by Reuters showed, which Africa’s biggest telecom group would seek to repatriate to offshore investors. MTN further paid a dividend in the first quarter, it said.

The central bank is gradually loosening policy to adopt a more dovish stance on interest rates especially as its foreign reserves are rising, giving the West African country a buffer with which to defend the naira.

The bank has reduced its issuance of open market bills to tighten naira liquidity, traders said with banking system liquidity closing at around 200 billion naira in credit on Monday, to lower treasury yields.

$1 = 314.50 naira Reporting by Chijioke Ohuocha Editing by Richard Balmforth

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Godwin Okafor is a financial journalist, Internet Social Entrepreneur and the Founder Naija247news Media Ltd He has over 16 experiences in journalism, which cuts across traditional and digital media. He started his journalism career in Business Day, Where he was a senior editorial graphic artist, before he left to start Naija247news, An Online Financial Newspaper in 2010. He has won series of awards and he is the chairman of Emmerich Resources Limited, the publisher of Naija247news.com and also sits on the board of Students In Business Awards, (SIBA).

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