text: Nigeria’s overnight lending rates soared to a record high of 100 percent on Tuesday, signalling a sharp tightening of naira supply as the currency fell to 200 to the dollar for the first time.
  A weekend decision to postpone presidential elections by six weeks, combined with plummeting oil prices, has damaged investor sentiment towards Nigeria, driving the naira to a succession of lows despite central bank efforts to prop it up.
  Emefiele, CBN governor: Nigeria faces serious economic crisis
  The central bank said on Tuesday the foreign exchange market was understandably nervous after the decision to postpone elections but said it was nothing to worry about. The bank is committed to sustaining a “stable and orderly” market, it added.
  The naira fell sharply to a fresh low of 200 to the dollar, shrugging off central bank intervention and ending at a record closing low of 199.90. It closed at 196.50 on Monday.
  “The direction of travel has been pretty clear for the past few months and probably will continue to be. And that will call for a stronger response from the authorities,” said Stuart Culverhouse, Global Head of Research at brokerage Exotix.
  The naira has been officially pegged at 160-176 to the dollar after an 8 percent devaluation in November but it has rarely traded within that range, and most analysts reckon authorities will have to devalue the currency again.
  Non-deliverable forwards — contracts used to bet on future exchange rate moves — price the naira as much as 30 percent weaker in a year’s time.
  The central bank was widely expected to move after the presidential election, but the decision to postpone it from Feb. 14 till March 28 due to security concerns has rattled investors.
  The rising cost of capital is likely to take a heavy toll on the economy.
  Naira liquidity on interbank markets dropped sharply on Tuesday after dealers paid for forex and bonds purchased earlier in the week, when the lending rate was 60 percent.
  “Capital flight has picked up, reflecting investor uncertainty. The rise in (overnight) rates will increase day-to-day funding of private sector operations in the run-up to the elections. Both will result in slower growth in the first quarter (of 2015),” said Angus Downie, head of economic research at Ecobank.
  The central bank soaked up liquidity through a 30 billion naira open market operation and sold $199.9 million at its twice-weekly forex auction at 168 naira per dollar on Monday.