JOHANNESBURG — Nigerian stocks dropped, replacing Zimbabwe’s as Africa’s worst performer this year, as sliding oil prices weakened the nation’s ability to shore up the currency.
The Nigerian Stock Exchange All Share Index (NGSEINDX) fell for a 10th day, bringing losses in 2014 to 12,5%.
Zimbabwe’s benchmark gauge is down 11,7% as President Robert Mugabe’s ruling party battles factional infighting and a slowing economy with factories shutting down and slumping consumer spending.
The currency of Africa’s largest producer of oil, which accounts for about 80% of government revenue, declined a fourth day as Brent crude slipped to its lowest level in four years.
The Central Bank of Nigeria reduced foreign-currency reserves to a three-month low to try to stem the naira’s 3,7% depreciation this year, while pledging to keep supporting the currency.
Nigeria’s central bank “remains intent on managing the exchange-rate situation without needing to hike rates or devalue the currency” before the February general election, Gareth Brickman and Catherine Bennett, analysts at Johannesburg-based ETM Analytics, said in an e-mailed note. “Current trends still show the outlook to be pressuring away its room for manoeuvre.”
A weaker currency would boost the cost of importing everything from fuel to food, threatening support for the party of President Goodluck Jonathan, who’s already under pressure for failing to stem deadly attacks by Islamist militants.
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Africa’s biggest economy imports about 70% of its fuel needs because of inadequate refining capacity.
The NSE All Share Index slid 1,6% to 36154,73 as of 12:23pm in Lagos, the commercial hub as 47 stocks retreated, four rose and 144 were unchanged.
The gauge is the world’s fifth-worst performer this year after benchmarks in Russia, Portugal, Greece and Austria. The naira weakened 0,4% to 166,58 per dollar. – Bloomberg
