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Naira declines, pares 1st weekly gain in seven

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The naira weakened against the dollar, paring its first weekly advance in seven, as oil, Nigeria's key export, slid amid signals of a fall in demand on reports showing the global economic slowdown is deepening.

The currency of Africa's biggest oil producer depreciated 0.4 percent to 162.85 per dollar as of 10:32 a.m. in Lagos, the commercial capital. The naira has strengthened 0.4 percent this week.

Nigerian benchmark Bonny Light crude retreated for a sixth straight day to $89.71 a barrel, a 30 percent fall from its March peak this year. Oil in New York tumbled below $80 a barrel and Brent crude fell under $90 a barrel yesterday as reports pointing at a global economic slowdown added to concern that demand will slow amid rising supplies.

As Bonny Light declines "the market could be excused for showing some nerves," Gregory Kronsten and Olubunmi Asaolu, strategists at FBN Capital Ltd. in London, wrote in an e-mailed note today.

German business confidence fell to a two-year low, the Munich-based Ifo institute said today after data yesterday showed that U.S. manufacturing shrank and home sales declined. Moody's Investors Service cut ratings for Credit Suisse Group AG and 14 other banks, while the International Monetary Fund said Europe's crisis has reached a "critical stage."

The Central Bank of Nigeria sold $750 million at two foreign-currency auctions this week, the most since the five days to Oct. 12. The Abuja-based regulator, which is the biggest supplier of dollars to the market, sells on Mondays and Wednesdays to support the naira.

Article credit: Businessday Newspaper

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Updated 7 Years ago

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