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Nigeria’s naira appreciated for a second day against the dollar on bets month-end dollar sales by oil companies and increased oil exports by sub-Saharan Africa’s second largest economy will support the local currency.
The currency of Africa’s biggest oil producer strengthened 0.1 percent to 157.53 per dollar as of 11:30 a.m. in Lagos, the commercial capital.
The oil industry, which is the second major supplier of foreign exchange after the central bank, often sells dollars to lenders around the month-end period to meet domestic spending needs. Nigeria plans to boost crude exports in May to a 10-month high, by exporting 69.3 million barrels, or 2.24 million barrels a day, the most since July. That compares with 78 cargoes totaling 2.22 million barrels a day for April, according to loading plans obtained by Bloomberg News.
“Month-end implies naira strength as energy firms increase their offerings of U.S. dollars on the interbank market,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Africa analysts at Rand Merchant Bank in Johannesburg, wrote in an e-mailed note today.
“The increase in export volume should provide some cushion to the Nigerian foreign exchange reserve in the face of global oil demand” and provide support for the naira, Lagos-based Cowry Assets Management Ltd. analysts led by Edgar Ebinum, wrote in an e-mailed note today.
Foreign reserves have risen 7.9 percent this year to $35.6 billion as of March 29, the central bank published on its website today. The nation’s bonny light crude is trading at more than $50 a barrel above the $72 a barrel incorporated into Nigeria’s 2012 budget, according to the bank.
The yield on Nigeria’s $500 million of dollar bonds due 2021 fell 10 basis points to 5.288 percent. Borrowing costs of domestic bonds due 2015 fell 21 basis points to 15.25 percent, according to the Financial Markets Dealers Association website.
Ghana’s cedi appreciated 0.1 percent to 1.7755 per dollar as of 11:30 a.m. in Accra, the capital.
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