Bloomberg News

Naira Heads for 2-Month High on Oil Company, Bank Dollar Sales

April 19, 2012

Nigeria’s naira headed for its highest close in two months as the state oil company was said to sell dollars and after auctions from the central bank.

The currency of Africa’s biggest oil producer advanced 0.1 percent to 157.1 per dollar on the interbank market as of 12:25 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira has risen 3.3 percent this year.

Nigerian National Petroleum Corp. periodically sells dollars to lenders to meet local spending needs. The oil industry is the second major supplier of foreign exchange to the market after the Central Bank of Nigeria, which sold $270 million at foreign currency at auctions on Monday and Wednesday this week to stabilize the naira.

Sales from NNPC “have provided support” for the naira, Leon Myburgh and Coura Fall, Africa strategists at Citigroup Inc. in Johannesburg, wrote in a note to clients today.

Nigeria’s foreign-exchange reserves have risen 9.8 percent this year to $36.15 billion as of April 17, according to data from the Abuja-based central bank. The West African nation’s benchmark Bonny Light crude has risen 8.5 percent this year.

“We continue to view developments in the CBN foreign exchange reserves as central to whether the bank will able to maintain” its 155 naira per dollar peg at auctions, Myburgh and Fall said. “If we do see incremental gains in the reserves, it will empower the CBN to keep the naira stable through 2012.”

The yield on Nigeria’s $500 million of dollar bonds due 2021 fell was little changed at 5.427 percent. Borrowing costs of domestic bonds due 2015 rose two basis points to 15.13 percent, according to the April 18 data on the Financial Markets Dealers Association website.

Ghana’s cedi rose less than 0.1 percent to 1.8215 per dollar in Accra.

To contact the reporter 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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