Breaking News

Tweet TWEET

Naira Snaps Two-Day Drop as Foreign-Currency Reserves Increase

The naira gained for the first time in three days after data from the Central Bank of Nigeria showed the country’s foreign-currency reserves increased.

The currency of Africa’s biggest oil producer rallied as much as 0.3 percent, the most since Jan. 25, as the nation’s foreign-exchange reserves advanced to $46.15 billion, according to data from the Abuja-based central bank, the highest since at least July 2010.

The increase to external reserves will provide a buffer against occasional demand pressures on the naira, which is likely to retain its present strength, analysts at the Lagos- based Financial Markets Dealers Association wrote in a report on its website.

The naira traded less than 0.1 percent stronger at 157.25 per dollar as of 2:42 p.m. in Lagos, the commercial capital, giving a gain of less than 0.1 percent in the week.

The naira is being supported in part by portfolio inflows, central bank Governor Lamido Sanusi said after the Jan. 21 policy meeting, where the bank held benchmark interest rates at a record high 12 percent for an eighth straight 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 is adding Nigerian debt to its local-currency government bond index next month.

Yields Decline

One-year Treasury bill yields fell to the lowest in 16 months at an auction on Feb. 6 as investor inflows pushed the subscription rate to a record. The regulator sold 117 billion naira ($744 million) 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.

The yield on the country’s 16.39 percent domestic bonds due January 2022 declined seven basis points to 10.86 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 rose one basis point to 4.109 percent today.

Ghana’s cedi gained less than 0.1 percent to 1.9015 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

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.