Bloomberg News

Nigeria’s Naira Advances to Three-Month High on Dollar Inflows

February 15, 2012

Feb. 15 (Bloomberg) -- Nigeria’s naira appreciated to the highest level in three months on central bank dollar sales and speculation of foreign-exchange inflows from the state oil company.

The currency of Africa’s biggest oil producer strengthened 1 percent to 158.40 per dollar as of 4:02 p.m. on the interbank market in Lagos, the commercial capital, according to data compiled by Bloomberg, the strongest closing price since Nov. 9.

Nigeria sold $350 million at a foreign-currency auction today, with dollars sold for between 156.40 naira and 156.77 naira each, the Abuja-based Central Bank of Nigeria said in an e-mailed statement. The marginal rate, which is also used as the prevailing exchange rate, strengthened 0.1 percent to 156.40 naira, compared with 156.50 naira, at the previous sale on Feb. 13, it said.

“The sale of $350 million by the central bank, which brings this week’s sales to $600 million against $450 million sold last week, has raised support for the naira,” Sewa Wusa, a currency analyst at Lagos-based Sterling Capital Ltd., said by phone today.

The central bank offers dollars to lenders at twice-weekly auctions as it tries to keep the exchange rate around a midpoint of 155 naira to a dollar.

“The Nigerian National Petroleum Corp. foreign-exchange sales this week have contributed to the naira appreciation,” Samir Gadio, a London-based emerging-markets strategist at Standard Bank Group Ltd., said by e-mail. “The stronger naira in the interbank market means the Central Bank of Nigeria has the opportunity to revalue the official foreign exchange rate” stronger at auction, he said.

Dollar Supply

The oil industry is the next major source of dollar supply to lenders after the central bank. Levi Ajuonuma, an NNPC spokesman, said by phone he couldn’t confirm whether the Abuja- based company had sold foreign exchange.

“The market expects some offshore inflows at next week’s T-bill auction, with the potential to strengthen the unit,” said Gadio. “The currency is certainly well supported and could break the 158 level.”

The central bank would like to keep the exchange rate stable while boosting foreign-currency reserves, Governor Lamido Sanusi said Jan. 31. The nation’s reserves reached $35 billion as of Feb. 13, the highest level since Sept. 12, according to central bank data.

Ghana’s cedi was little changed at 1.7054 per dollar as of 4:05 a.m. in Accra, the capital, according to data compiled by Bloomberg.

--Editors: Peter Branton, Alex Nicholson

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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