Nigeria stocks in near 3-1/2 year low

Nigerian stocks fell 3.6 percent to near a three-and-half-year low on Wednesday after the local currency hit a new trough of 300 per dollar on the black market, weighed down by sliding oil prices and the central bank decision to curb dollar supply.

The stock index, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, fell to 25,206 points, dropping to levels last reached in September 2012. The index is down 9.1 percent in its eight days of trading this year, after shedding 17.4 percent last year.

Currency and stock markets have been hard hit by the persistent fall in crude, Nigeria’s main export, triggering a fall in government revenues and exit of foreign investors from the local bourse.

Brent crude, which gives Nigeria around 95 percent of its foreign earnings, fell to $30 a barrel for the first time in twelve years on Tuesday.

“With pressure on foreign reserves and oil prices at $30 per barrel, devaluation is now unavoidable. The issue will be the quantum and methodology,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank.

The central bank on Monday stopped the sale of dollars to retail foreign exchange operators saying they were using up the country’s foreign reserves for illegal transactions and selling the dollar above the bank’s official rate of 197 naira.

The central bank on Monday stopped the sale of dollars to retail foreign exchange operators saying they were using up the country’s foreign reserves for illegal transactions and selling the dollar above the bank’s official rate of 197 naira.