Bloomberg News

Naira Poised for Best Week in 14 on Central Bank Sales, Inflows

November 23, 2012

Nigeria’s naira advanced, poised for its best weekly gain in 14, after the central bank sold the most dollars in eight weeks and on foreign-currency inflows into the West African nation’s bonds.

The currency of Africa’s biggest oil producer rallied for a third day, climbing 0.1 percent to 157.4 a dollar at 11:10 a.m. in Lagos, the commercial capital. The naira has appreciated 0.7 percent this week, the most since the five days ended Aug. 17.

The central bank sold $400 million at foreign-currency auctions this week, the most in eight. The regulator sells dollars on Mondays and Wednesdays to keep the naira within a 3 percent band around 155 a dollar. Nigeria sold 116.18 billion naira ($728 million) of Treasury bills and 50 billion of bonds on Nov. 21.

The central bank’s sales and foreign-currency inflows into the fixed-income markets “are the main factors” supporting the currency this week, Jide Solanke, an analyst at First Securities Discount House Ltd, said by phone today from Lagos. “We expect stability in the naira.”

The naira’s appreciation could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20 after the regulator held its benchmark rate at a record-high 12 percent.

Inflation, which accelerated for the first time in four months to 11.7 percent in October on widespread flooding of farms, is still above the bank’s target of less than 10 percent.

JPMorgan Chase & Co. added Nigerian bonds to its benchmark emerging-market index series last month, predicting the inclusion may lure $1.5 billion to sub-Saharan Africa’s second- largest economy. Barclays will add Nigeria to its local-currency government bond index in March, it said Nov. 6. The credit rating of sub-Saharan Africa’s second-largest economy was raised one level on Nov. 7 to BB- by Standard & Poor’s.

Yields on 10-year naira debt fell six basis points to 12.21 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined one basis point to 4.39 percent

Ghana’s cedi weakened a fourth day, slipping 0.1 percent to 1.8975 per dollar in Accra, the capital.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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