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Naira Rallies to Highest in Nine Months as Banks Sell Dollars

Aug. 15 (Bloomberg) -- Nigeria’s naira gained to the strongest in more than nine months as lenders sold dollars to comply with central bank regulations on foreign-exchange holdings.

The currency of Africa’s biggest oil producer climbed as much as 1 percent to 156.900 a dollar, the highest on a closing basis since Nov. 3, 2011. It traded at 157.050 as of 3:47 p.m. in Lagos, the commercial capital.

“The naira was supported by sales by banks trying to meet latest stipulated dollar holdings,” Wale Abe, chief executive of the Lagos-based Financial Markets Dealers Association, said by phone today. “The latest central bank decisions have made it difficult for banks to hold dollars for speculation, a development that has supported the naira.”

The Central Bank of Nigeria reduced the amount of foreign exchange banks can hold as a percentage of their shareholders’ funds to 1 percent from 3 percent and increased their reserve requirements to 12 percent of total assets from 8 percent. The regulator sold $126.8 million at a foreign-currency auction today at 155.80 naira, the Abuja-based bank said in an e-mailed statement.

“There was also unconfirmed report of dollar sales by an oil company,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., which trades currencies, said by phone. The oil industry is the second major supplier of the US currency after the central bank.

Yields on the West African nation’s 16 percent domestic debt due 2019 rose two basis points, or 0.2 percentage point, to 16.52 percent, according to yesterday’s prices on the Financial Markets Dealers Association website. Borrowing costs on the West African nation’s $500 million of Eurobonds due 2021 fell thirteen basis points to 5.008 percent today.

Ghana’s cedi gained for a fourth day, adding 0.5 percent to 1.9422 per dollar in Accra, its strongest since July 4.

To contact the reporter on this story: Emele Onu in Lagos at

To contact the editor responsible for this story: Dulue Mbachu at

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