Nigeria Naira Rallies for Best Week in Five on Oil Company Sales
Nigeria’s naira advanced to the best weekly gain in five, even as it eased on the day, on speculation of increased foreign-currency sales by oil companies and investment flows into Africa’s biggest crude producer.
The currency weakened 0.1 percent to 156.8 a dollar by 3:03 p.m. on the interbank market in Lagos, the commercial capital, giving a a weekly gain of 0.3 percent. The naira has increased 3.5 percent this year, the best performer of 20 African currencies, according to data compiled by Bloomberg.
“The naira has been supported by foreign-exchange sales from oil companies, a trend likely to be sustained in coming days,” Samir Gadio, a London-based emerging-market strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today. “Additionally, offshore capital flows into government securities have also underpinned the currency.”
Oil-producing companies, which sell dollars to meet domestic expenses, are the second-biggest source of foreign currency after the central bank, which sells dollars to lenders at twice-weekly auctions to help manage the exchange rate.
Borrowing costs for Nigeria’s federal government dropped after JPMorgan Chase & Co. announced in August it will add the country’s bonds to its GBI-EM index series from Oct. 1. The yield on the 16.39 percent naira debt due January 2022 has fallen 315 basis points to 12.98 percent since the start of August, according to yesterday’s prices compiled by the Lagos- based Financial Markets Dealers Association.
The yield on the nation’s $500 million of Eurobonds due January 2021 was down 3 basis points at 4.49 percent today.
The central bank, led by Governor Lamido Sanusi, has left the benchmark interest rate unchanged at a record 12 percent this year, increased lenders’ reserve requirements and limited access to money auctions to stop dealers from buying foreign currency using naira purchased from the central bank at a discount.
Ghana’s cedi fell less than 0.1 percent to 1.8879 a dollar in Accra, the capital.
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