Bloomberg News

Nigerian Naira Strengthens the Most in Two Weeks on Dollar Sales

July 05, 2012

Nigeria’s naira strengthened the most in two weeks after the central bank and oil companies sold dollars.

The currency of Africa’s top oil producer appreciated 0.5 percent to 162.1050 per dollar in the interbank market as of 3:29 p.m. in Lagos, the biggest gain on a closing basis since June 18.

The Central Bank of Nigeria sold $251 million at a foreign- currency auction yesterday, bringing its total sales this week to $601 million naira compared with $700 million the previous week. Oil-producing companies that sell dollars around the month-end to meet local expenses are the second major supplier after the bank.

“The naira is reacting to an increase in dollar supply by the central bank as well as sales of an undisclosed amount by oil companies engaged in their usual month-end supply,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said in an interview today.

The central bank held the benchmark interest rate at 12 percent this year to curb the naira’s decline and combat inflation, after raising it 5.75 percentage points in 2011.

While inflation slowed to 12.7 percent in May from 12.9 percent in April, the rate is set to peak at 14.5 percent in the third quarter, the highest since April 2010, according to the central bank.

The yield on Nigeria’s domestic 15.1 percent bonds due 2017 rose six basis points to 16.06 percent, according to July 4 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 was unchanged at 5.517 percent today.

Ghana’s cedi depreciated for the first time in three days, down 0.4 percent to 1.9475 per dollar in Accra, the weakest level since at least 1993, according to data compiled by Bloomberg.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net


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