Bloomberg News

Naira Gains for Fourth Day as Oil Companies Sell Dollars

November 02, 2011

Nov. 2 (Bloomberg) -- Nigeria’s naira gained for a fourth day, the longest rally in two months, as oil companies sold dollars and demand for the U.S. currency at a central bank auction exceeded the amount offered.

The currency of Africa’s top oil producer appreciated 0.2 percent to 157.40 per dollar at 3:40 p.m. in Lagos, the strongest since Oct. 25, according to data compiled by Bloomberg.

Oil companies selling dollars in the market supported the naira, Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said by e-mail.

The central bank sold $180 million at an auction today, compared with $262.96 million demanded by lenders. The marginal rate, which is also used as the prevailing exchange rate, depreciated 0.3 percent to 150.73 per dollar, compared with 150.25 naira at the previous auction on Oct. 31, the Abuja-based bank said in e-mailed statement.

Central bank Governor Lamido Sanusi said Oct. 31 he may lower the official exchange rate to 155-156 per dollar. The central bank aims to keep the naira within a 3 percentage-point band above or below 150 per dollar at twice-weekly foreign- currency auctions, where the marginal rate is taken as the prevailing exchange rate.

The central bank has been struggling to keep the naira within its target as oil prices declined and demand for imports surged. Mounting demand for dollars had pushed the naira outside its band targeted by the central bank, with the currency weakening to a record 166.6 per dollar on Oct. 10.

“We expect naira to continue weakening,” as the central bank battles to save reserves while promising support for the naira, Alan Cameron, currency analyst with FCMB (UK) Ltd., said by e-mail.

--Editors: Stephen Kirkland, Peter Branton

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

To contact the reporters on this story: Emele Onu in Lagos at eonu1@bloomberg.net

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


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