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MTN Drops Most in Month as Naira Traders Plan Weaker Rate vs USD
JOHANNESBURG (Capital Markets in Africa) — Telecom operator’s shares drop after currency traders in MTN’s biggest market, Nigeria, announce plans to introduce parallel exchange rate of 399 per dollar for naira from January 16. Stock falls as much as 4.6%, trades 3% lower at 129.89 rand as of 11:57 am in Johannesburg; biggest drop since Dec. 15.
Nigerian retail currency traders will set the FX rate before the central bank meeting and they’ve set it at 399 naira to the dollar, which is about 100 naira to the dollar weaker than the official rate,” Kate Turner-Smith, analyst at BPI Analysts, says by phone from Cape Town. “It means that the Nigerian side of the business needs to devalue the currency”.
Further naira weakness may affect MTN’s plans to sell stock in Nigerian unit. “I was always sceptical that the economic circumstances in Nigeria were favourable to list, so the weakening of the currency is probably going to make the chances of them listing this year in a vanilla format even less than previously”. Obviously, they need a strong economic environment to list; otherwise, they’re going to be listing at a massive, massive discount”