Naira Strengthens First Time in Three Days After Bank’s Sale
The naira appreciated for the first time in three days after central bank sold dollars to lenders at an auction to support the local currency.
The currency of Africa’s biggest oil producer strengthened less than 0.1 percent to 162.95 per dollar as of 3:45 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
The Central Bank of Nigeria sold $300 million at a foreign- currency auction today, with lenders buying the enter amount on sale, the Abuja-based bank said in an e-mailed statement. The marginal rate was, which is also used as the prevailing exchange rate, was 155.90 naira per dollar, compared with 155.84 naira at the previous auction on June 6, The regulator sold $600 million at auctions last week, the most since February, according to data compiled by Bloomberg.
The “central Bank is supporting the naira with its dollar supply, having increased sales recently,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said by phone.
Foreign-exchange reserves rose to $37.7 billion by June 4, compared with $32.9 billion as of Dec. 29. A “re-emergence of crisis in Europe” put pressure on the naira, central bank Governor Lamido Sanusi said May 22 after the regulator left its benchmark interest rate on hold for a fourth consecutive meeting at a record 12 percent.
“In the absence of any external dollar inflow, we expect the central bank to lean on the external reserve to defend the naira,” analysts at Lagos-based Cowry Asset Management Ltd., led by Edgar Ebinum, wrote in an e-mailed note to clients today.
The yield on Nigeria’s domestic bonds due 2018 rose three basis points to 15.61 percent, according to the June 8 data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due 2021 fell 11 basis points to 5.4743 percent.
“We expect dollar vs naira exchange rate to remain above 160 in the near-term unless the central bank intervenes aggressively,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, strategists at Rand Merchant Bank, wrote in a report today.
Ghana’s cedi weakened 0.5 percent to 1.9183 per dollar, in Accra, the capital.
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