Naira records three-day decline
The naira yesterday slid for a third day on slumping oil prices and production will weaken the country’s foreign exchange reserves and government finances.
The currency depreciated 0.2 per cent to 158.63 per dollar and has retreated 1.6 per cent this year, according to data compiled by Bloomberg.
Qua Iboe and Bonny Light crude, the nation’s main export grades, both slid for a seventh day to their lowest levels since July 2012. “This implies that the government will be less able to build up reserves in the Excess Crude Account, thereby exposing the economy to a possible oil price shock.
“In addition, the oil benchmark price was increased from the previous year’s budget, while global oil prices are expected to average lower this year than in 2012,” Melissa Verreynne, an analyst at NKC Independent Economists said.
Nigeria sets a price per barrel when calculating oil revenue in the budget, and saves any money collected above that level in the Excess Crude Account to meet spending shortfalls.
President Goodluck Jonathan in February approved this year’s budget after lawmakers raised the benchmark oil price to $79 a barrel from the $75 proposed by the government.
The Central Bank of Nigeria (CBN) uses the country’s reserves to stabalise the naira, selling dollars to lenders at twice-a-week auctions.