The naira strengthened for the second day as rising oil prices outweighed concern of growing political tension after the Christmas-day bombing that prompted the government to declare an emergency in parts of the country.
The currency appreciated 1.3 percent to 160.235 per dollar as of 3:10 p.m. on the interbank market in Lagos, the commercial capital, according to data compiled by Bloomberg.
The currency of Africa’s largest oil producer gained as the commodity climbed after a pickup in manufacturing activity in China and India. President Goodluck Jonathan declared a state of emergency in parts of four northern states on Dec. 31 and set up a special counter-terrorism unit within the armed forces after attacks left at least 43 people dead and 73 wounded in a Christmas-day bombing of a church near Abuja.
“We expect oil prices to be supported next year,” Nalini Cundapen, an emerging markets strategist at Societe Generale SA in London, wrote in an e-mailed note to clients today. The central bank has supported the naira quite “aggressively” by tightening monetary policy in 2011, she said.
Nigeria will hold its first foreign-currency auction tomorrow since the market closed for holiday on Dec. 21, the Abuja-based central bank said today in an e-mailed statement.
Political tensions between the largely Islamic north and Christian south are a barrier to a ratings upgrade, S&P said.
Boko Haram, which means “Western education is a sin,” says it’s fighting to establish sharia law in the north. Nigeria, Africa’s most populous country of more than 160 million people, is roughly split between a mainly Muslim north and predominantly Christian south.
Ghana’s cedi declined for the first time in three days, down 1 percent to 1.655 per dollar as of 3:10 p.m. in Accra, according to data compiled by Bloomberg.
Central bank Governor Lamido Sanusi raised rates to a record 12 percent last year as inflation climbed above the bank’s 10 percent target. S&P raised its outlook on Nigeria’s credit rating and said it may upgrade Africa’s largest oil producer from B+ if the government follows through with plans to boost the economy and savings.
Emele Onu in Lagos at firstname.lastname@example.org