Naira Falls Most in 2 Weeks as Investors Sell Bonds, Equities

The naira weakened the most in two weeks amid speculation that investors in Nigeria’s bond and equities market were demanding dollars to exchange profits made in the local currency.

The currency of Africa’s biggest oil producer depreciated as much as 0.2 percent to 157.68 per dollar, the most since March 28, and traded at 157.60 by 3:09 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira has retreated 1 percent this year. The Nigerian Stock Exchange All Share Index fell 0.2 percent, taking its loss this week to 2.1 percent as it heads for the first five-day decline in five weeks.

“There’s significant demand from investors who want to cash out of bonds and equities,” Jide Solanke, an analyst at Lagos-based First Securities Discount House Ltd., said by phone. “The central bank has increased the sale of dollars” and the demand is “coinciding with the end-of-year company earnings,” he said.

Banks, including Guaranty Trust Bank Plc (GUARANTY) and Zenith Bank Plc (ZENITHBA), reported full-year earnings for 2012 this month. Guaranty’s net income jumped 69 percent while Zenith Bank profit more than doubled to 100.7 billion naira ($639 million). Yields on the government’s naira bonds due January 2022 have risen 16 basis points, or 0.16 percentage point, to 11 percent this week, according to yesterday’s prices compiled by Bloomberg.

Dollar Sales

The Central Bank of Nigeria sold $600 million this week, the biggest amount at its twice-a-week auctions in nine months. The Abuja-based regulator sells the U.S. currency to keep the naira within a 3 percent band above or below 155 per dollar.

The central bank has enough reserves to defend the naira and “keep it where we want,” Governor Lamido Sanusi said in a March 24 interview in Lagos. Nigeria’s foreign-currency reserves advanced 10 percent to $48.7 billion this year, according to the institution’s data.

Yields on Nigeria’s $500 million of Eurobonds due January 2021 dropped six basis points, or 0.06 percentage point, to 4 percent.

Ghana’s cedi declined 0.2 percent to 1.945 per dollar in the capital, Accra.

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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