Nigeria’s naira strengthened for a second day against the dollar as oil-producing companies sold the U.S. currency to meet month-end domestic expenses and as the revenue of sub-Saharan Africa’s second-biggest economy expanded.
The naira appreciated 0.1 percent to 157.42 a dollar as of 3:45 p.m. in Lagos, the commercial capital. The currency has rallied 3.1 percent this year, the second-best performer in Africa, according to data compiled by Bloomberg.
Oil-producing companies, which sell dollars to meet local expenses around the month-end, are the second-biggest source of foreign currency after the Central Bank of Nigeria, which sells dollars at auctions to help manage the exchange rate. Revenue was 15 percent higher than budgeted in the first half at 5.6 trillion naira ($35.6 billion), with the budget deficit at 1.5 percent of gross domestic product, the bank said today.
“Oil companies sold about $80 million to banks yesterday, with more expected before the weekend,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone.
The central bank sold $200 million at an auction yesterday, bringing sales this week to $400 million, unchanged from last week, according to data on its website. The regulator aims to keep the naira within a 3 percent band around 155 per dollar.
The naira’s appreciation can be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20, after the regulator held its benchmark rate at a record-high 12 percent.
Inflation, which accelerated for the first time in four months to 11.7 percent in October on widespread flooding of farms, is still above the bank’s target of less than 10 percent.
Yields on 10-year naira debt fell one basis point to 12.36 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 seven basis points to 4.257 percent.
Ghana’s cedi depreciated for the eighth day, slipping 0.1 percent to 1.9085 a dollar in Accra, the capital.