Bloomberg News

Nigeria’s Naira Weakens After Oil-Company Dollar Sales Wane

February 01, 2013

Nigeria’s naira fell after investors speculated that foreign-exchange sales by oil companies had ebbed.

The currency of Africa’s largest oil producer weakened 0.1 percent to 157.36 per dollar at 2:14 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira has declined 0.2 percent this week.

“The oil companies and multinationals were able to fill in the demand gap in previous sessions,” Jide Solanke, an Lagos- based analyst at First Securities Discount House Ltd., said by phone today. “The interbank market has exhausted the money they got from outside the central bank, so it’s understandable that the rate should depreciate marginally.”

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 Jan. 30, the lowest in three auctions.

“The exchange has firmed up in a 156-158 range with marginal volatility, which is likely to persist as long as the oil price remains well-supported and the global risk-on environment ensures continued capital inflows,” Samir Gadio, an emerging markets strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today. “We saw some foreign- exchange sales from oil companies in previous days and consistent offshore capital inflows.”

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.

The yield on the country’s 16.39 percent domestic bonds due January 2022 were unchanged at 11.24 percent in the secondary market yesterday, according to data compiled on the Financial Markets Dealers Association website.

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 less than 0.1 percent to 1.904 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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