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Naira Heads for First Weekly Gain in Four on Oil Company Sales

Dec. 16 (Bloomberg) -- Nigeria’s naira advanced for a second day, headed for its first weekly gain in four, as oil companies sold the U.S. currency to banks.

The currency of Africa’s biggest oil producer appreciated 0.4 percent to 161.60 per dollar as of 1:21 p.m. in Lagos, the commercial capital, heading for a weekly gain of 0.1 percent.

The central bank on Nov. 21 lowered the midpoint of its exchange-rate band at the auctions to 155 naira per dollar from 150 naira as rising imports and weakening oil prices increased pressure on the currency. Sub-Saharan Africa’s second-biggest economy depends on oil exports for more than 95 percent of foreign income, according to the Finance Ministry.

“The appreciation or relative stability at the inter-bank market was due to oil company dollar sales,” analysts at Lagos-based Diamond Bank said in a report today. “Dealers expect the exchange rate to be fairly stable as dollar demand diminishes” from the oil company sales, it said.

Nigeria sold $200 million at its last foreign-currency auction on Dec. 14, less than the $256.7 million demanded by lenders, with the marginal rate, which is also used as the prevailing exchange rate at 156.70 per dollar, unchanged from a previous sale on Dec. 12, the Central Bank of Nigeria said. The last time lenders’ demand was met was Nov. 30.

“The value of the naira greatly depends on the demand and supply of dollars by the central bank and the autonomous sources of which the central bank is the major supplier,” Wale Abe, chief executive of Lagos-based Financial Market Dealers Association, said by phone.

Ghana’s cedi appreciated by 0.1 percent to 1.6385 per dollar as of 1.p.m. in Accra, the nation’s capital.

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

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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