The naira strengthened, trimming its first weekly decline in four, on speculation oil companies may be selling dollars.
The currency of Africa’s largest oil producer appreciated for the first time in four days, gaining 0.1 percent to 162 per dollar as of 11:21 a.m. on the interbank market in Lagos. The naira has depreciated 0.7 percent this week, according to data compiled by Bloomberg.
“There are some minor oil flows in the pipeline today, and also the market expects the Nigerian National Petroleum Corp. to sell dollars next week, which has resulted in a marginal appreciation of the unit in recent hours,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in an e-mailed reply to questions. Earlier in the week “sales from oil companies dried up,” he said
The oil industry, including the state-owned NNPC, is the second major source of dollar supplies in the country after the Central Bank of Nigeria, which offers dollars at auctions on Mondays and Wednesdays and through interbank trading to maintain exchange-rate stability.
Oil, Nigeria’s key export, advanced in New York, extending a weekly gain, as investors speculated that China’s government will boost stimulus measures and the U.S. tightened sanctions on Iran. Nigerian benchmark Bonny Light crude gained for a third day, advancing 0.7 percent to $101.27 per barrel, the highest in more than a week.
“The stronger oil price in early July has weighed positively on sentiment or has at least reduced the magnitude of the negative positioning against the naira witnessed in June,” said Gadio.
Nigeria’s foreign-currency reserves have fallen by $1.2 billion since the end of May to $36.48 billion, according to July 11 data compiled by the Abuja-based central bank.
The yield on Nigeria’s domestic 15.1 percent bonds due 2017 rose three basis points to 16.07 percent, according to July 12 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 slid two basis points to 5.52 percent.
Ghana’s cedi strengthened 0.5 percent to 1.9463 per dollar in Accra, the capital, extending its gain this week to 0.5 percent.