Nigeria’s naira appreciated for a second day, reaching its highest in 11 months as oil companies sold dollars and the addition of the country’s debt to JPMorgan Chase & Co. benchmark indexes attracted offshore funds.
The currency of Africa’s biggest oil producer strengthened 0.4 percent to 156.55 per dollar as of 11:10 a.m. in Lagos, the commercial capital. A close at this level will be its strongest since Nov. 3, 2011, according to data compiled by Bloomberg. The naira has appreciated 3.7 percent this year, the best-performer in Africa.
Debt maturing in March 2014, October 2019 and January 2022 will join JPMorgan’s indexes between Oct. 1 and Dec. 3, Giulia Pellegrini, the bank’s London-based sub-Saharan Africa economist, wrote in a note Sept. 26. Oil producing companies, which sell dollars at the end of the month to meet domestic expenses, are the second-biggest source of the currency after the Central Bank of Nigeria. The nation’s foreign-currency reserves rose to a more than two-year high of $41.3 billion on Oct. 2, according to data from the Abuja-based central bank.
“The naira has firmed and reserves have increased,” helped by offshore money from the inclusion of government bonds into JP Morgan index, FBN Capital Ltd. analysts in London led by Gregory Kronsten wrote in an e-mailed note today.
The market is expecting dollar sales from the local unit of Royal Dutch Shell Plc today while Chevron Corp.’s unit sold yesterday, Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone today.
Yields on Nigeria’s 16.39 percent debt maturing January 2022 fell 16 basis points to 12.66 percent on Oct. 2, the first trading day after their inclusion in the JPMorgan Chase & Co. index, according to data on the Financial Markets Dealers Association website. It rose 8 basis points to 12.74 percent yesterday. The yield on the nation’s $500 million of Eurobonds due January 2021 fell one basis point to 4.778 percent today.
Ghana’s cedi weakened 0.2 percent to 1.8945 a dollar in Accra, the capital.