Bloomberg News

Naira Strengthens Most in Six Weeks as Nigerian Reserves Climb

June 15, 2011

June 15 (Bloomberg) -- Nigeria’s naira appreciated the most in six weeks against the dollar after central bank data showed reserves have increased this month.

The currency of Africa’s biggest oil producer jumped 1 percent to 155.20 per dollar in the interbank market by 10:29 a.m. in Lagos, the largest intraday advance since May 5.

The West African nation’s gross reserves stood at $34.1 billion as of June 13, a 6.2 percent increase this month, according to central bank data. Governor Lamido Sanusi has been defending the naira by using foreign reserves in a bid to curb inflation. The bank attempts to keep the naira within a 3 percentage-point band above or below 150 per dollar at its twice-weekly auctions.

“We still believe the naira should be stable on the 150 mark,” Victor Ndukauba, an analyst at Lagos-based Afrinvest West Africa Ltd., said by phone today. “A lot of the surge in dollar demand in our view is more artificial than real. We should find some accretion of reserves.”

Demand for dollars at central bank auctions peaked this year at $586.4 million on March 28, before dropping to as little as $277.1 million on April 27, during elections which returned incumbent President Goodluck Jonathan to power. Banks sought to buy $383.8 million at the last auction on June 13. The central bank will hold another sale today.

Nigeria’s National Bureau of Statistics may today release inflation data for last month. The inflation rate fell to a revised 11.3 percent in April from 12.8 percent a month earlier. The central bank raised its benchmark interest rate half a percentage point to 8 percent on May 24, a third increase this year, as it tries to stabilize the naira and bring inflation below 10 percent.

--Editors: Ana Monteiro, Stephen Kirkland

To contact the reporter on this story: Chris Kay in London at ckay5@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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