Naira Strengthens as Central Bank Holds Benchmark Interest RateEmele Onu
The naira appreciated as the central bank held interest rates at a record high today and as the regulator sold the U.S. currency at an auction.
The currency of Africa’s biggest oil producer strengthened less than 0.1 percent to 157.0999 a dollar as of 5:40 p.m. in Lagos, the commercial capital, reversing earlier declines of as much as 0.3 percent, according to data compiled by Bloomberg.
The Central Bank of Nigeria’s Monetary Policy Committee, held its policy rate at 12 percent today, Governor Lamido Sanusi told reporters in Abuja, the nation’s capital. That was in line with the forecast of 12 of 13 economists surveyed by Bloomberg. The inflation rate, which eased to 12 percent in December, is still above the central bank’s target of below 10 percent. The regulator sold $100 million at an auction today compared with $108 million at the previous sale Jan. 16, it said in an e-mailed statement.
“The naira should continue to receive support from the current level of interest rates, while issuance plans and offshore appetite for Nigerian debt will remain key drivers of bond yields,” Razia Khan, the head of African economic research at Standard Chartered Plc in London, said in an e-mailed note to clients after the data release.
Nigeria’s legislature approved a 4.98 trillion-naira ($31.7 billion) budget for 2013 in December, 7 percent higher than last year, and raised the benchmark oil price in this year’s budget by $4 to $79 a barrel, giving more funds to the government for spending. The budget will be based on an exchange rate of 160 naira a dollar. President Goodluck Jonathan hasn’t yet signed the budget or rejected it.
Yields on naira debt due 2022 fell 2 basis points to 11.25 percent, according to Jan. 18 prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 were little changed at 3.713 percent today.
Ghana’s cedi appreciated by 0.1 percent to 1.90801 a dollar in Accra, the capital.