Naira falls on higher fuel import demand - iReporterNG.Com | No #1 News Media in Nigeria

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Naira falls on higher fuel import demand

Naira falls on higher fuel import demand

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The naira headed for its weakest in about a month against the dollar on higher demand for the U.S. currency, as the state oil company and independent dealers ordered fuel imports.

The currency of Africa’s largest oil producer weakened 0.3 percent to 157.80 per dollar as of 11:30 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

A close at that rate will be its weakest since Feb. 16. “In the current week, we expect demand pressure in the market,” as the state company and refined petroleum products importers “place orders to avert an impending fuel scarcity,” analysts at Lagos-based Cowry Asset Management Ltd., said in an e-mailed note to clients today.

President Goodluck Jonathan’s attempt in January to remove fuel subsidies sparked a week-long general strike and prompted parliamentary investigation into the spending.

The government is probably paying more than 2 trillion naira ($12.6 billion) to fuel importers to cover the difference between market costs and state-regulated prices for last year, said Farouk Lawan, chairman of a committee investigating the discrepancies.

The probe reduced the demand for foreign currency to fund fuel imports, central bank Deputy Governor Tunde Lemo said Feb. 7. Fuel retailers have resumed imports after a government assurance they will receive refunds for selling at subsidised prices, the state-owned Nigerian National Petroleum Corp. said on Feb. 23.

Nigeria is revising its 2012 budget to include 888 billion naira in fuel subsidies as the spending plans put to lawmakers in December did not make provision for subsidy, the Finance Ministry said in a statement on Feb. 16.

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