The naira strengthened for a third day, heading for a third weekly gain, on dollar sales by the central bank and oil companies.
The currency of Africa’s biggest oil producer appreciated 0.2 percent to 157.9 per dollar as of 10:27 a.m. in Lagos, the commercial capital, rising 0.6 percent this week. A close at this level would be the highest since Nov. 8, according to data compiled by Bloomberg.
“The currency’s performance has been underpinned by recent strong dollar sales by oil companies” and “continued foreign exchange sales by the Central Bank of Nigeria,” Ridle Markus, Dumisani Ngwenya and Mike Keenan, Johannesburg-based Africa analysts at Absa Capital, wrote in a note to clients today.
Nigeria has sold $600 million at two foreign-currency auctions this week, the largest amount sold in five days by the central bank since October. The bank offers dollars at twice- weekly auctions to maintain exchange rate stability. The oil industry is the next major source of dollar supply to lenders after the central bank.
The central bank would like to keep the exchange rate stable while boosting foreign-currency reserves, Governor Lamido Sanusi said Jan. 31. Reserves reached $35 billion as of Feb. 13, the highest level since Sept. 12, according to central bank data.
“Should oil prices and production remain firm and fiscal expenditure is contained, reserve accretion will continue,” the Absa analysts said. “Against this backdrop and considering that monetary policy remains relatively tight, the naira is likely to be well supported in the near-term.”
Ghana’s cedi strengthened for a second day, gaining 0.2 percent to 1.7013 per dollar as of 9:24 a.m. in Accra, the capital.
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