Naira Gains for 2nd Day as Oil Rise Outweighs Political Concern

The naira strengthened for the second day as rising oil prices outweighed concern of growing political tension after the Christmas-day bombing that prompted the government to declare an emergency in parts of the country.

The currency appreciated 1.3 percent to 160.235 per dollar as of 3:10 p.m. on the interbank market in Lagos, the commercial capital, according to data compiled by Bloomberg.

The currency of Africa’s largest oil producer gained as the commodity climbed after a pickup in manufacturing activity in China and India. President Goodluck Jonathan declared a state of emergency in parts of four northern states on Dec. 31 and set up a special counter-terrorism unit within the armed forces after attacks left at least 43 people dead and 73 wounded in a Christmas-day bombing of a church near Abuja.

“We expect oil prices to be supported next year,” Nalini Cundapen, an emerging markets strategist at Societe Generale SA in London, wrote in an e-mailed note to clients today. The central bank has supported the naira quite “aggressively” by tightening monetary policy in 2011, she said.

Nigeria will hold its first foreign-currency auction tomorrow since the market closed for holiday on Dec. 21, the Abuja-based central bank said today in an e-mailed statement.

Political tensions between the largely Islamic north and Christian south are a barrier to a ratings upgrade, S&P said.

Boko Haram, which means “Western education is a sin,” says it’s fighting to establish sharia law in the north. Nigeria, Africa’s most populous country of more than 160 million people, is roughly split between a mainly Muslim north and predominantly Christian south.

Ghana’s cedi declined for the first time in three days, down 1 percent to 1.655 per dollar as of 3:10 p.m. in Accra, according to data compiled by Bloomberg.

Central bank Governor Lamido Sanusi raised rates to a record 12 percent last year as inflation climbed above the bank’s 10 percent target. S&P raised its outlook on Nigeria’s credit rating and said it may upgrade Africa’s largest oil producer from B+ if the government follows through with plans to boost the economy and savings.

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

Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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