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Nigeria’s Naira Strengthens as Sanusi Pledges Price Stability

Nov. 28 (Bloomberg) -- Nigeria’s naira strengthened the most in more than a week after Central Bank of Nigeria Governor Lamido Sanusi said the regulator won’t abandon its mandate of price stability.

The currency of Africa’s biggest oil producer appreciated 0.4 percent to 157.45 a dollar as of 3:09 p.m. in Lagos, the commercial capital, reversing yesterday’s decline. The naira has strengthened 3.1 percent this year, the second-best performing currency tracked by Bloomberg in Africa.

“The central bank is responsible for stability,” Sanusi said at a conference yesterday. “If we abandon that function because we’re pursuing somebody else’s job, we will lose it.”

The central bank boosted borrowing costs to bolster the naira and “anchor” price expectations, Sanusi said. The Monetary Policy Committee has left its benchmark interest rate unchanged at a record high 12 percent this year. Consumer prices rose 11.7 percent in October, staying above the central bank’s goal of less than 10 percent.

“The central bank is pleased with the results of its tightening and with the real interest rates for investors,” Gregory Kronsten, head of economic research at FBN Capital Ltd. in London, wrote in an e-mailed note to clients today. “The bank will meet again in January although we do not see easing until later in the year.”

The Abuja-based central bank sold $200 million at an auction today, it said in an e-mailed statement, bringing sales this week to $400 million, unchanged from last week, according to data on its website. The regulator sells dollars at twice-weekly auctions on Mondays and Wednesdays to keep the naira within a 3 percent band around 155 per dollar.

Yields on 10-year naira debt fell one basis point to 12.37 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 fell nine basis points to 4.27 percent.

Ghana’s cedi depreciated for the seventh day, slipping 0.4 percent to 1.9080 a dollar in Accra, the capital.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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