Nigeria’s Naira Falls 2nd Day After Central Bank, Oil Sales Wane

Nigeria’s naira weakened for a second day after the central bank sold the least dollars in a month at an auction and as oil-company sales were said to wane.

The currency of Africa’s biggest oil producer slid 0.3 percent to 157.45 a dollar as of 2:31 p.m. in Lagos, the commercial capital. The naira has advanced 3.1 percent this year, the second-best performer in Africa, according to data compiled by Bloomberg.

The Central Bank of Nigeria sells dollars to lenders at foreign currency auctions on Mondays and Wednesdays to help manage the exchange rate. The regulator sold $66 million at its auction yesterday, the least since the Nov. 12 sale. Oil companies, including the state-owned Nigerian National Petroleum Corp., periodically sell dollars to lenders to meet local spending needs and are the second-biggest source of foreign currency.

“The naira is reverting to its recent equilibrium after the large foreign-exchange sales from the NNPC pushed the exchange rate lower in previous days,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in an e-mailed reply to questions. “The lower foreign-exchange sales at the auction yesterday reflected the ample dollar supply in the market.”

The naira’s appreciation this year could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20 after the regulator held its benchmark rate at a record-high 12 percent.

Nigeria’s foreign-currency reserves have increased 36 percent this year to $44.64 billion, according to Dec. 7 data compiled by the Abuja-based central bank.

‘Narrow Range’

“In the past week, month-end dollar sales by oil firms have supplemented CBN supply,” Ridle Markus and Dumisani Ngwenya, Africa strategists at Absa Capital in Johannesburg, wrote in a note to clients today. “With a stronger external buffer, firm oil prices and production as well as still tight monetary policy, we continue to expect the naira to trade in a narrow range into 2013.”

Yields on 10-year naira debt fell three basis points to 12 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined two basis points to 4.17 percent today.

Ghana’s cedi weakened 0.2 percent to 1.8956 per dollar 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: Vernon Wessels at vwessels@bloomberg.net

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