The Nigerian currency rose for a third day to the highest in more than three weeks as oil companies in Africa’s biggest producer were said to sell dollars to meet local expenses.
The naira climbed 0.2 percent to 157.63 per dollar by 2:30 a.m. in Lagos, the commercial capital, the highest on an intraday basis since March 11, according to data compiled by Bloomberg. The currency has declined 0.9 percent this year.
“Some companies sold some undisclosed amount of dollars,” Sewa Wusa, head of research at Sterling Capital Ltd., said by phone from Lagos. If sales continue “we’ll definitely see some more strength,” he said.
Oil companies are the second-biggest source of dollars after the Central Bank of Nigeria, which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability.
The central bank sold $237 million at an auction yesterday, compared with $300 million at the previous sale on March 27. It didn’t hold an offer on April 1 because of a public holiday.
Nigeria’s foreign-currency reserves have risen 10 percent this year to $48.7 billion to April 2, according to data compiled by the central bank. Bonny Light crude, the nation’s main export grade, is priced above this year’s $79 budgeted benchmark set by the government at $110.26 a barrel.
“Provided that the oil price obliges, in our view the CBN will be able to hold the line on the naira exchange rate this year,” Gregory Kronsten and Olubunmi Asaolu, strategists at FBN Capital Ltd., wrote in an e-mailed note today. “Reserves at end-March provided cover for more than nine months’ imports of goods, and close to seven months when we include services.”
Yields on the government’s local-currency bonds due June 2019 rose eight basis points, or 0.08 percentage point, to 10.73 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website.
Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 declined six basis points to 4.31 percent today.
Ghana’s cedi dropped less than 0.1 percent to 1.942 per dollar in Accra.