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Naira Appreciates as Oil Companies, Central Bank Sell Dollars

April 12 (Bloomberg) -- Nigeria’s naira, Africa’s strongest performing currency this year, advanced after oil companies and the central bank sold dollars as import demand waned.

The currency of Africa’s biggest oil producer appreciated as much as 0.3 percent and traded 0.1 percent higher at 157.55 per dollar as of 2:58 p.m. on the interbank market in Lagos, the commercial capital. The naira has risen 3 percent this year, the biggest increase out of 20 African currencies tracked by Bloomberg.

“There have been supplies from the multinational oil companies, they keep supplying dollars to the market,” Edgar Ebinum, an analyst at Cowry Asset Management Ltd., said by phone from Lagos today. Demand for U.S. currency “has not really fully picked up, the number of importers has been reduced drastically,” he said.

Forty-two fuel retailers including the stated-owned Nigerian National Petroleum Corp., Conoil Plc and Oando Plc were issued fuel import permits, the Petroleum Products Pricing Regulatory Agency said last month. The oil industry is the second major supplier of foreign exchange to the west African country after the central bank, which holds two foreign-currency auctions a week and sold $150 million yesterday.

“Initially there was spurious demand,” said Ebinum. “The number of importers was 140, now it’s been reduced to 42, so you can imagine the impact of that on demand.”

Nigeria’s parliament is also probing whether fraudulent practices by government agencies spurred a fivefold rise in spending on gasoline subsidies in the past three years.

Nigeria sold $59.96 million at a one-month foreign-currency forward auction yesterday, less than the $63.18 million demanded by lenders, the Abuja-based central bank said in an e-mailed statement today. The spot weighted average, which is also used as the prevailing exchange rate, was 155.88 naira per dollar, compared with 155.97 naira at the previous auction on April 4.

Yields on Nigeria’s $500 million of dollar bonds rose six basis points, or 0.06 percent, to 5.535 percent in London.

Ghana’s cedi declined for a third day, falling 0.2 percent to 1.7995 per dollar as of 2 p.m. in Accra, the capital.

To contact the reporters on this story: Chris Kay in Abuja at ckay5@bloomberg.net; Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Stephen Kirkland at skirkland@bloomberg.net

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