Naira Appreciates on Bets State Oil Company Will Sell Dollars

Nigeria’s naira appreciated on speculation the state oil company will sell dollars to lenders before an auction by the central bank.

The currency of Africa’s biggest oil producer strengthened 0.2 percent to 157.25 per dollar as of 12:50 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

The state oil company Nigerian National Petroleum Corp., which runs joint ventures with Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Total SA and Eni SpA to pump more than 90 percent of the country’s crude oil, periodically sells dollars to lenders to meet local spending needs. The oil industry is the second major supplier of foreign exchange to the market after the Central Bank of Nigeria, which sells foreign currency at auctions on Mondays and Wednesdays to stabilize the naira.

“The state oil company and some other firms are expected to boost dollar liquidity in the market, which is good for the naira,” Abubakar Muhammed, chief executive of Lagos-based Forward Marketing Bureau de Change Ltd., said by phone today. “Earlier in the week there was a sale by Royal Dutch Shell to some lenders.”

The central bank kept its benchmark interest rate unchanged at a record high of 12 percent for a third meeting on March 20. Inflation rate in the West African country declined to 11.9 percent in February from 12.6 percent a month earlier, according to the National Bureau of Statistics.

The yield on Nigeria’s $500 million of dollar bonds due 2021 fell two basis points to 5.430 percent. Borrowing costs of domestic bonds due 2015 declined 7 basis points to 15.11 percent, according to the April 17 dada on the Financial Markets Dealers Association website.

Ghana’s cedi depreciated 0.2 percent to 1.8210 per dollar in Accra, the weakest on record since at least June 1993.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Peter Branton at pbranton@bloomberg.net

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