Nigeria’s naira advanced against the dollar, heading for the highest in more than three months, on speculation that foreign-exchange demand is waning during an investigation into fuel importers.
The currency of Africa’s biggest oil producer rose 0.4 percent on the interbank market to 158.55 per dollar, heading for its highest close since Nov. 18, as of 11:21 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
Nigeria’s parliament is probing whether fraudulent practices by government agencies fueled a fivefold rise in spending on gasoline subsidies in the past three years, according to the head of the investigating committee.
“Speculative demand from oil importers and the fictitious import deals to get dollars has come down because of the general focus on that industry,” Jide Solanke, an analyst at First Securities Discount House Ltd., said by phone from Lagos, the commercial capital. “We have seen a substantial drop in demand because nobody wants to get caught.”
Lower demand for dollars by importers after cutbacks in fuel subsidies has buoyed the currency, according to the Central Bank of Nigeria. Fuel imports have been a large source of pressure on Nigeria’s foreign-currency market and demand for foreign currency to fund fuel imports has eased, central bank Deputy Governor Tunde Lemo told a committee at a public hearing on Feb. 7.
The government is probably paying more than 2 trillion naira ($12.6 billion) to fuel importers to cover the difference between market costs and state-regulated prices for last year, said Farouk Lawan, chairman of a House of Representatives committee investigating the discrepancies. That’s up from 384 billion naira in 2009 and represents almost half of last year’s 4.5 trillion-naira budget.
Oil company dollar dales “could happen in coming days, providing renewed support for the naira,” Leon Myburgh and Coura Fall, Africa strategists at Citigroup Inc. in Johannesburg, wrote in an e-mailed note today. The oil industry is the next major source of dollar supply to lenders, after the central bank, which offers foreign currency to lenders at twice-weekly auctions.
Nigeria sold $250 million at a foreign-currency auction yesterday, the Abuja-based Central Bank of Nigeria said, without mentioning the amount demanded by lenders. Dollars were sold for between 156.50 naira and 156.92 naira each, with the marginal rate, which is also used as the prevailing exchange rate, at 156.50 naira, unchanged from the previous sale on Feb. 8, it said in an e-mailed statement.
The central bank would like to keep the exchange rate stable while boosting foreign-currency reserves, Governor Lamido Sanusi said Jan. 31. The nation’s reserves reached $34.98 billion as of Feb. 9, the highest level since Sept. 12, according the central bank data.
Ghana’s cedi fell for a fourth day, retreating 0.2 percent to 1.7171 per dollar, according to data compiled by Bloomberg.