Nigeria’s naira strengthened for a second day, headed for its strongest in a month, as the country added to its foreign-exchange reserves, bolstering its ability to defend the currency.
The naira gained as much as 0.2 percent to 156.80 a dollar and traded less than 0.1 percent stronger at 157.05 as of 3:05 p.m. in Lagos, the commercial capital.
The nation’s foreign-exchange reserves have increased 34.9 percent this year to $44.5 billion as at Nov. 30, according to data released today by the Central Bank of Nigeria in Abuja, the capital. The bank sells dollars to lenders to help keep the naira within a 3 percent band around 155 per dollar.
“The steady accretion in reserves raises investors’ confidence that the naira will always be supported,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone today.
The central bank held its benchmark interest rate at a record high 12 percent this year to ease inflation pressures and stabilize the naira. Inflation, which accelerated for the first time in four months to 11.7 percent in October, remains above the bank’s target of less than 10 percent.
The yield on 16.39 percent naira debt due January 2022 rose one basis point to 12.20 percent, according to yesterday’s prices on the website of the Lagos-based Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 fell seven basis points to 4.176 percent.
Ghana’s cedi depreciated less than 0.1 percent to 1.8914 a dollar in Accra, the capital.
Editors: Peter Branton, Dulue Mbachu