The naira gained for the first time in three days on foreign inflows into Nigeria’s capital markets after a monthly bond auction.
The currency of Africa’s biggest oil producer climbed less than 0.1 percent to 157.25 per dollar at 1:39 p.m. in Lagos, the commercial capital.
Nigeria’s borrowing costs fell for a fourth monthly bond auction after the central bank forecast that inflation slowed in January. The Debt Management Office sold 105 billion naira ($667 million) in securities, it said in a statement today on its website.
“Whenever there is a bond auction or Treasury-bill sales, there are some offshore portfolio investors that partake in that market and they come with dollars,” Sewa Wusa, research head at Sterling Capital Ltd., said by phone from Lagos, the commercial capital. “That gives strength to the naira.”
The inflation rate in Nigeria fell for the first time in three months in December to 12 percent. Consumer-price growth may be close to 10 percent in January, though keeping it at less than that for the rest of the year “will be very difficult,” Central Bank of Nigeria Governor Lamido Sanusi said in an interview last month. The median of five estimates in a Bloomberg survey was for an inflation rate of 9.5 percent in January.
The naira is being supported in part by portfolio inflows, Sanusi said after the Jan. 21 policy meeting, where the bank held the benchmark interest rate at a record high 12 percent for an eighth straight time.
Nigeria’s bond yields have dropped to record lows as JPMorgan Chase & Co., the world’s biggest underwriter of emerging-market debt, added the securities to its benchmark GBI- EM index in October. Barclays Plc is adding Nigerian debt to its local-currency government bond index next month.
The yield on the country’s 16.39 percent domestic bonds due January 2022 were unchanged at 10.87 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 fell five basis points to 4.297 percent today.
Ghana’s cedi advanced 0.4 percent to 1.898 per dollar in Accra, the capital.
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