June 19 (Bloomberg) -- The naira climbed for a second day, reaching the strongest in more than two weeks, after the Nigerian state-owned oil company was said to sell dollars in the market.
The currency of Africa’s biggest oil producer appreciated 0.7 percent to 161 per dollar as of 2:27 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. A close at that level would be the highest since June 1. The naira has gained 0.8 percent against the dollar this year, the third-best performance among African currencies tracked by Bloomberg.
Nigerian National Petroleum Corp. sold about $400 million in the interbank market today, according to an e-mailed note from Access Bank Plc’s treasury group. An e-mail to NNPC’s head office seeking comment wasn’t immediately answered. The oil industry is the second major source of dollar supplies in the country after the Central Bank of Nigeria, which issued $400 million at a foreign-currency auction yesterday, matching the amount sold on June 13, which was the most since Feb. 8.
“Notwithstanding still seemingly strong importer demand, the increased intervention by the CBN and expected end-of-month dollar sales by oil firms going into next week bodes well for the naira’s near-term outlook,” Ridle Markus, Dumisani Ngwenya and Mike Keenan, Johannesburg-based strategists at Absa Capital, wrote in a report today.
Nigeria’s foreign-currency reserves, which have risen 14 percent this year, fell for a seventh straight day to $37.4 billion, according to June 15 data compiled by the central bank. The West African nation’s benchmark Bonny Light crude has dropped 25 percent from its March peak this year.
The naira was under pressure recently due to “a pick-up in dollar demand, particularly from fuel importers, leading to the central bank having to make periodic interventions on the inter-bank market,” Gregory Kronsten and Olubunmi Asaolu, London-based analysts at FBN Capital Ltd., wrote in a note to clients today. They see the naira reaching 163 per dollar year-end and 170 by the end of 2013.
Nigeria’s inflation rate fell to 12.7 percent in May from 12.9 percent in April, the National Bureau of Statistics said today, staying above the central bank’s target and adding to expectations interest rates will remain unchanged at a record high of 12 percent.
“The lower inflation print for May should reinforce the near-term downside bias on local yields,” said the Absa Capital strategists.
The yield on Nigeria’s domestic bonds due 2019 fell three basis points to 15.61 percent, according to the June 18 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 slid four basis points to 5.5798 percent today.
Ghana’s cedi weakened 0.1 percent to 1.9295 per dollar in Accra.
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