Bloomberg News

Nigeria’s Naira Advances as Oil Companies Said to Sell Dollars

May 11, 2012

Nigeria’s naira strengthened, paring a weekly loss, as oil companies were said to have sold dollars in the market.

The currency of Africa’s biggest oil producer advanced 0.2 percent to 157.45 per dollar as of 2:15 p.m. on the interbank market in Lagos, the commercial capital. The naira, which has gained 3.1 percent this year, the strongest performer in Africa, is heading for a decline of 0.1 percent this week.

“The release of funds from oil companies on the market” is supporting the naira, Jide Solanke, an analyst at First Securities Discount House Ltd., said by phone from Lagos today.

Oil companies are the second-biggest suppliers to the market after the Central Bank of Nigeria, which manages the naira by selling foreign currency to lenders in biweekly auctions. The central bank, based in the capital Abuja, sold $270 million to lenders this week, the same as a week earlier.

Yields on the West African nation’s Eurobonds due 2021 fell four basis points, or 0.04 percent, to 5.301 percent. Borrowing costs on Nigeria’s naira debt due 2015 fell five basis points to 14.96 percent, according to May 10 data on the Financial Markets Dealers Association website.

Ghana’s cedi slipped for a second day, retreating 0.3 percent to 1.886 per dollar in Accra, the capital, heading for the lowest close on record. The currency has plunged 13 percent this year, the second-worst performer in Africa.

The slumping currency and concern about its effect on consumer prices prompted the central bank to raise its key lending rate twice in three months. The Accra-based regulator said April 30 that commercial banks will be required to hold reserves of 9 percent of deposits in the local currency only and sold treasury bills in an effort to boost the cedi.

“The Ghanaian cedi has depreciated sharply in recent months as strong dollar demand from corporates continued unabated,” Ridle Markus, Dumisani Ngwenya and Mike Keenan, Absa Capital strategists in Johannesburg, wrote in a report today. “We believe that more measures may be needed to stem the depreciation of the cedi, which may include a further tightening of monetary policy.”

To contact the reporter on this story: Chris Kay in Abuja at

To contact the editor responsible for this story: Gavin Serkin at

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