Naira Gains First Week in Three on Foreign Inflows Into Bonds

The naira gained for a second day, set for its first weekly advance in three, after foreign inflows into Nigerian bonds.

The currency of Africa’s biggest oil producer climbed less than 0.1 percent to 157.3 per dollar at 1:25 p.m. in Lagos, the commercial capital. The naira has added less than 0.1 percent this week.

Nigeria’s borrowing costs fell for a fourth monthly bond auction this week after the central bank forecast that inflation slowed in January. The Debt Management Office sold 105 billion naira ($667 million) in securities, it said in a statement yesterday on its website.

“Yields continue to fall as more investors get involved in the local market,” Kojo Amoo-Gottfried, a London-basd analyst at FM Capital Partners Ltd., wrote in an e-mailed note to clients today. “The increased foreign capital has supported the naira.”

The inflation rate in Nigeria fell for the first time in three months in December to 12 percent. Consumer-price growth may be close to 10 percent in January, though keeping it at less than that for the rest of the year “will be very difficult,” Central Bank of Nigeria Governor Lamido Sanusi said in an interview last month. Data to be released next week will probably show price gains slowed to 9.5 percent last month, the median of five estimates in a Bloomberg survey.

“Inflation is expected to remain under control providing increased support to investors,” said Amoo-Gottfried.

The naira is being buoyed in part by portfolio inflows, Sanusi said after the Jan. 21 policy meeting, where the bank held the benchmark interest rate at a record high 12 percent for an eighth straight time.

Bond Yields

The foreign-currency reserves of Africa’s most populous country have advanced 6 percent this year to $46.6 billion, the highest since at least 2010, according to Feb. 13 data compiled by the central bank.

Nigeria’s bond yields have dropped to record lows as JPMorgan Chase & Co., the world’s biggest underwriter of emerging-market debt, added the securities to its benchmark GBI-EM index in October. Barclays Plc is adding Nigerian debt to its local-currency government bond index next month.

The yield on the country’s 16.39 percent domestic bonds due January 2022 declined four basis points to 10.84 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 were little changed at 4.367 percent today.

Ghana’s cedi gained 0.4 percent to 1.8975 per dollar in Accra, the capital.

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