Bloomberg News

Naira Set for Biggest Weekly Gain This Year on Dollar Supply

July 06, 2012

Nigeria’s naira advanced for a second day, set for its biggest weekly gain this year as oil producers sold dollars to meet month-end expenses and the central bank supplied the U.S. currency at auctions.

The currency of Africa’s largest oil producer strengthened 0.8 percent to 160.80 per dollar as of 11:55 a.m. in Lagos the commercial capital, according to data compiled by Bloomberg. The naira is up 1.2 percent this week, the biggest gain on a closing basis since the five days to Dec. 30.

“Royal Dutch Shell Plc (RDSA), Total SA (FP), Addax Petroleum and some other oil companies sold reasonable amounts of dollars that complemented the central bank’s supply,” Wale Abe, chief executive of Lagos-based Financial Markets Dealers Association, said in a telephone interview today. Spokesmen for the oil companies could not be reached immediately for comments.

The Central Bank of Nigeria sold $251 million at a foreign- currency auction on July 4, bringing its total sales this week to $601 million naira compared with $700 million the previous week. Oil producers are the second major supplier after the central bank.

Foreign-currency reserves, which rose 9.9 percent this year, retreated to $36.529 billion, according to the latest figures from the central bank dated July 4.

The “decline in the reserves is attributable to central bank’s use of it to support the naira,” Bismarck Rewane, chief executive of Lagos-based Financial Derivatives Co., wrote in an e-mailed note today.


The central bank has 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 was unchanged at 16.06 percent, according to July 5 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 was unchanged at 5.499 percent today.

Ghana’s cedi depreciated for the second day by 0.4 percent to 1.9550 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

To contact the editor responsible for this story: Dulue Mbachu at

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