Naira Appreciates as Oil Companies, Central Bank Sell Dollars

Nigeria’s naira, Africa’s strongest performing currency this year, advanced after oil companies and the central bank sold dollars as import demand waned.

The currency of Africa’s biggest oil producer appreciated as much as 0.3 percent and traded 0.1 percent higher at 157.695 per dollar as of 12:37 p.m. on the interbank market in Lagos, the commercial capital. The naira has risen 2.9 percent this year, the biggest increase out of 20 African currencies tracked by Bloomberg.

“There have been supplies from the multinational oil companies, they keep supplying dollars to the market,” Edgar Ebinum, an analyst at Cowry Asset Management Ltd., said by phone from Lagos today. Demand for U.S. currency “has not really fully picked up, the number of importers has been reduced drastically,” he said.

Forty-two fuel retailers including the stated-owned Nigerian National Petroleum Corp., Conoil Plc (CONOIL) and Oando Plc (OANDO) were issued fuel import permits, the Petroleum Products Pricing Regulatory Agency said last month. The oil industry is the second major supplier of foreign exchange to the west African country after the central bank, which holds two foreign-currency auctions a week and sold $150 million yesterday.

“Initially there was spurious demand,” said Ebinum. “The number of importers was 140, now it’s been reduced to 42, so you can imagine the impact of that on demand.”

Nigeria’s parliament is also probing whether fraudulent practices by government agencies spurred a fivefold rise in spending on gasoline subsidies in the past three years.

Yields on Nigeria’s $500 million of dollar bonds rose six basis points, or 0.06 percent, to 5.528 percent in London.

Ghana’s cedi declined for a third day, falling 0.1 percent to 1.799 per dollar as of 11:36 a.m. 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: Stephen Kirkland at skirkland@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.