The naira gained to the strongest level in more than three months as central bank sold dollars at an auction and on speculation Nigeria’s currency may appreciate further.
The currency of Africa’s biggest oil producer appreciated as much as 0.6 percent to 156.57 against the dollar, the highest since November, before trading less than 0.1 percent stronger at 157.53 per dollar as of 4:40 p.m. in Lagos, the commercial capital. The naira has climbed 3 percent this year, the fourth-biggest gain among 22 currencies in Africa tracked by Bloomberg.
“Oil companies were initially supplying dollars only at the end of the month but this has changed due possibly to fear of losses as dollar demand whittles down,” a development that continues to strengthen the naira against the U.S. currency, Edgar Ebinum, analyst at Lagos-based Cowry Asset Management Ltd., said in e-mailed response to questions. “The naira will remain strong against the dollar on continued dollar inflows from the oil industry.”
Nigeria sold $145.3 million at a foreign-currency auction today, less than $250 million on offer, the Abuja-based Central Bank of Nigeria said in an e-mailed statement. The marginal rate, which is also used as the prevailing exchange rate strengthened 0.3 percent 156.10 naira, compared with 156.40 naira, at the previous sale on Feb. 15.
The Central Bank of Nigeria offers dollars at twice-weekly auctions and interbank trading to maintain exchange rate stability. The oil industry is the second major source of dollar supplies in the country after the central bank, which will hold its next auction on Feb. 22.
Nigeria’s foreign-exchange reserves have increased 6.1 percent this year to $34.9 billion as of Feb. 16, according data compiled by Bloomberg. Oil has advanced 6.2 percent so far this year. The annual inflation rate rose to 12.6 percent in January from 10.3 percent a month earlier, the National Bureau of Statistics said in an e-mailed statement today.
“Persistent dollar inflows into the interbank market continue to support a downward trend in the dollar against the naira,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Africa analysts at Rand Merchant Bank in Johannesburg, wrote in an e-mailed note today.
Ghana’s cedi appreciated for the third straight day, up 0.2 percent to 1.7003 per dollar as of 3:40 p.m. in Accra, the capital.