Nigeria’s Naira Advances on Inflows Into Treasury Bill Auction

The naira gained on investor inflows into a Central Bank of Nigeria Treasury bill sale, which also reduced the amount of local currency in circulation.

The naira rose less than 0.1 percent to 157.22 per dollar by 12:04 p.m. in Lagos, the commercial capital. The currency of Africa’s biggest oil producer advanced 3.9 percent last year to become the best performer in Africa, according to data compiled by Bloomberg.

Nigerian 1-year Treasury bill yields fell to the lowest in 16 months at an auction yesterday as investor inflows pushed the subscription rate to a record. The Abuja-based central bank sold 219 billion naira ($1.4 billion) of T-bills, tightening local currency supply.

“Trends in naira performance closely track” foreign investment inflows, Lagos-based Asset & Resource Management Company Ltd. analysts wrote in an e-mailed report today. “This also helps explain substantial naira appreciation in the interbank market” amid large dollar inflows.

The regulator sold 117 billion naira of 364-day bills at a yield of 10.6 percent, the lowest since a Sept. 29, 2011 sale. Bids totaled 342 billion naira, the highest on record.

Index Inclusion

The naira is being supported in part by portfolio inflows, central bank Governor Lamido Sanusi said after a Jan. 21 the policy meeting where benchmark interest rates were held at a record 12 percent for an eighth consecutive time.

Nigeria’s bond yields have dropped to record lows as JPMorgan Chase & Co., the world’s biggest underwriter of emerging-market debt, added the securities to its benchmark GBI- EM index in October. Barclays Plc will add Nigerian debt to its local-currency government bond index next month.

The yield on the country’s 16.39 percent domestic bonds due January 2022 declined eight basis points to 10.93 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 were little changed at 4.05 percent today.

Ghana’s cedi fell 0.1 percent to 1.9075 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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