Bloomberg News

Nigeria’s Naira Gains on Subdued Dollar Demand as Reserves Rise

April 10, 2012

Nigeria’s naira gained against the dollar as subdued demand for the U.S. currency and strong oil prices led to an increase in the nation’s foreign reserves.

The currency of Africa’s biggest oil producer advanced 0.1 percent to 157.55 per dollar as of 10:44 a.m. on the interbank market in Lagos, the commercial capital. The naira has risen 3 percent this year, according to data compiled by Bloomberg.

Foreign-exchange reserves have risen 9 percent this year to $35.8 billion as of April 4, according to the Central Bank of Nigeria. The regulator, based in the capital Abuja, sold $250 million last week at auction, the lowest amount since November.

The rise in reserves “is consistent with the subdued demand for foreign exchange at the CBN’s auctions in first quarter 2012,” Gregory Kronsten, the London-based head of macroeconomic research at FBN Capital Ltd., wrote in an e-mailed note today. There has been “an enhanced supply” of dollars on the market, he said.

Nigerian benchmark Bonny Light crude has advanced 12 percent this year, supporting the increase in reserves.

Yields on the West African nation’s $500 million of dollar bonds rose three basis points, or 0.03 percent, to 5.429 percent in London. Borrowing costs on domestic 2019 bonds fell eight basis points to 15.21 percent according to April 5 prices on the Financial Markets Dealers Association website.

Ghana’s cedi dropped 0.6 percent to 1.7875 per dollar as of 9:48 a.m. in Accra, the capital.

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

To contact the editor responsible for this story: Stephen Kirkland at skirkland@bloomberg.net


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