Naira Intervention Seen Triggering Biggest Rally in Two Years
Nigeria’s naira surged the most in almost two years as Standard Bank Group Ltd. (SBK) said the central bank sold dollars directly to the market to lift the currency from a year-low.
“The central bank intervened today to calm the market and signal that it will protect the exchange rate,” Samir Gadio, a London-based emerging-markets strategist at Standard Bank, said in an e-mailed reply to questions today. “Additionally, there was also an Open Market Operations auction for the first time in several weeks to mop up excess liquidity.”
Ugochukwu Okoroafor, a spokesman for the Abuja-based Central Bank of Nigeria, didn’t answer two calls to his mobile phones seeking comment.
The currency of Africa’s biggest crude producer jumped 2.4 percent to 159.80 per dollar as of 3:47 p.m. in Lagos, the commercial capital, its biggest increase since October 2011 on a closing basis. The advance saw the naira rebound to a monthly gain of 0.6 percent, according to data compiled by Bloomberg.
The central bank sometimes sells dollars directly to lenders on the interbank market outside of its weekly auctions. Nigeria’s foreign-exchange reserves slid 4.1 percent to $46.85 billion on Aug. 29 from a high this year of $48.9 billion in May, according to central bank data.
The regulator auctions foreign exchange on Mondays and Wednesdays. It sold $563.5 million this week, compared with $548.4 million in the previous five days.
Debate among Federal Reserve officials on reducing monetary stimulus has roiled financial markets since May. Oil companies in Nigeria, which sell the U.S. currency mainly at the end of the month to pay domestic expenses, are the second-biggest supplier of dollars after the Abuja-based central bank.
Borrowing costs on Nigeria’s Eurobonds due Jan. 2021 were little changed at 5.76 percent.
Ghana’s cedi rose 0.9 percent to 2.135 per dollar in Accra, the most on a closing basis since July 26.
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