Bloomberg News

Naira Pares Monthly Decline on Expectation of Oil Company Sales

January 31, 2013

The naira gained against the dollar on expectations of month-end foreign-currency sales by oil companies operating in Nigeria to meet local expenses.

The currency of Africa’s largest oil producer rose 0.1 percent to 157.22 a dollar at 3:43 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira weakened 0.7 percent this month, after gaining by the same amount in December.

“The normal month-end sales by the oil majors will give some support,” Sewa Wusu, head of research at Sterling Capital Ltd., said by phone from Lagos today. The naira fell yesterday after the central bank reduced foreign-exchange supply at auction “and that was not anticipated,” he said.

The naira has gained from foreign-currency inflows to oil companies investing in the country’s hydrocarbons and portfolio funds, Central Bank of Nigeria Governor Lamido Sanusi said after keeping the benchmark interest rate unchanged for the eighth time on Jan. 21.

Oil companies periodically sell dollars to lenders to meet local spending needs and are the second-biggest source of foreign currency after the Abuja-based central bank’s twice- weekly auctions. The regulator sold $120 million at a foreign currency auction yesterday, the lowest in three auctions.

The yield on the country’s 16.39 percent domestic bonds due January 2022 increased three basis points to 11.26 percent in the secondary market yesterday.

Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 rose two basis points to 3.897 percent today.

Ghana’s cedi fell 0.1 percent to 1.9035 a 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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