Nigerian stocks posted a seventh
consecutive weekly loss, the longest
streak since September 2011, as
investors anticipating a devaluation
of the naira continue to shy away
from the country’s assets.
The Nigerian Stock Exchange dropped
2.2 percent since Monday. The index
gained 0.3 percent at the close on
Thursday, snapping 11 days of losses.
The market, which is closed on
Friday and Monday for Eid
celebrations, has dropped 7.2 percent
this quarter, the worst-performance
globally outside of China, according
to a Bloomberg ranking of 93
primary indexes.
Nigeria’s central bank has
introduced several trading
restrictions to support the currency
of Africa’s biggest oil producer in the
face of an almost-50 percent slump
in crude prices in the past year. Last
month it stopped importers of 41
items ranging from private jets to
toothpicks from using official foreign
exchange markets. That’s led to a
surge of demand for dollars on the
black market, reinforcing investors’
belief that a devaluation of the
official rate is necessary, according
to Ayodele Salami, chief investment
officer at Duet Asset Management.
The spread between the black-market
and interbank currency rates “has
opened up massively,” Salami, who
oversees about $200 million of
African equities, said by phone from
London. “It’s causing foreign flows
into the Nigerian market to reverse.
That’s why you’re seeing people
reduce their exposure to Nigeria.”
‘Inflationary Spiral’
The naira fell 0.3 percent to 198.90
per dollar at 3:20 p.m. in Lagos, the
commercial capital, having mostly
traded between 198 and 200 since
the start of March. Black market
dealers sold dollars at a rate of 241
on Thursday, Hasan Melo, head of
Roysygma Bureau de Change Ltd.,
said by phone from Lagos. Non-
deliverable forwards indicate the
naira will weaken to 249.75 in 12
months.
The central bank’s moves risk
creating an “inflationary spiral” as
local manufacturers struggle to fill
the void left by imports dropping, JF
Ruhashyankiko, an analyst at
Goldman Sachs Group Inc., said in an
e-mailed note Wednesday.
Average yields on naira-denominated
government debt rose 3 basis points
to 15.3 percent on Wednesday, the
highest since March 30.

www.bloomberg.com/news/articles/2015-07-16/nigeria-stocks-post-seventh-weekly-loss-as-investors-eye-naira

cc naijacutee, puskin , FOD

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Am still waiting for when N1 will be equal to $1