Bloomberg News

Naira Gains for 2nd Day as Oil Rise Outweighs Political Concern

January 03, 2012

Jan. 3 (Bloomberg) -- The naira strengthened for the second day as rising oil prices outweighed concern of growing political tension after the Christmas-day bombing that prompted the government to declare an emergency in parts of the country.

The currency appreciated 1.3 percent to 160.235 per dollar as of 3:10 p.m. on the interbank market in Lagos, the commercial capital, according to data compiled by Bloomberg.

The currency of Africa’s largest oil producer gained as the commodity climbed after a pickup in manufacturing activity in China and India. President Goodluck Jonathan declared a state of emergency in parts of four northern states on Dec. 31 and set up a special counter-terrorism unit within the armed forces after attacks left at least 43 people dead and 73 wounded in a Christmas-day bombing of a church near Abuja.

“We expect oil prices to be supported next year,” Nalini Cundapen, an emerging markets strategist at Societe Generale SA in London, wrote in an e-mailed note to clients today. The central bank has supported the naira quite “aggressively” by tightening monetary policy in 2011, she said.

Nigeria will hold its first foreign-currency auction tomorrow since the market closed for holiday on Dec. 21, the Abuja-based central bank said today in an e-mailed statement.

Political tensions between the largely Islamic north and Christian south are a barrier to a ratings upgrade, S&P said.

Boko Haram, which means “Western education is a sin,” says it’s fighting to establish sharia law in the north. Nigeria, Africa’s most populous country of more than 160 million people, is roughly split between a mainly Muslim north and predominantly Christian south.

Ghana’s cedi declined for the first time in three days, down 1 percent to 1.655 per dollar as of 3:10 p.m. in Accra, according to data compiled by Bloomberg.

Central bank Governor Lamido Sanusi raised rates to a record 12 percent last year as inflation climbed above the bank’s 10 percent target. S&P raised its outlook on Nigeria’s credit rating and said it may upgrade Africa’s largest oil producer from B+ if the government follows through with plans to boost the economy and savings.

--Editors: Ash Kumar, Gavin Serkin

Emele Onu in Lagos at eonu1@bloomberg.net

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

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


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