Nigeria’s naira strengthened to its highest in almost seven weeks as oil companies and the central bank sold dollars and the European Central Bank signalled it may act to help stem the spread of the region’s debt crisis.
The currency of Africa’s biggest oil producer appreciated 0.1 percent to 157.30 per dollar as of 4:09 p.m. on the interbank market in Lagos, the commercial capital, its strongest since Feb. 23, according to data compiled by Bloomberg.
The oil industry is the second major supplier of foreign exchange after the Central Bank of Nigeria that holds twice- weekly auctions on Mondays and Wednesday’s to stabilize the naira. Crude rose from the lowest close in almost two months in New York after ECB Executive Board member Benoit Coeure suggested the bank may restart bond purchases for Spain. The nation’s bonny light crude is trading at more than $50 a barrel above the $72 a barrel incorporated into the country’s 2012 budget, as at yesterday, according to the central bank.
The naira should “strengthen further due to dollar sales by oil companies,” Access Bank analysts led by Tony Monye and Michael Ndiomu wrote in e-mailed note to clients.
Nigeria sold $150 million at a foreign-currency auction today, with lenders buying the entire amount on offer, the Abuja-based central bank said in an e-mailed statement.
Dollars were sold for between 155.80 naira and 156.01 naira each, with the marginal rate, which is also used as the prevailing exchange rate strengthened by 0.1 percent to 155.80 naira per dollar, it said.
Borrowing costs on the West African nation’s $500 million of dollar bonds rose seven basis points to 5.51 percent at 4:09 p.m. in London.
Ghana’s cedi appreciated less than 0.1 percent to 1.79 per dollar at 4:09 p.m. in Accra, the capital.
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