Nigerian Naira Strengthens as Central Bank Boosts Dollar Sales

The naira erased its loss and gained for the first time in three days after the central bank raised the amount of U.S. currency sold at an auction today.

The currency of Africa’s second-biggest economy strengthened 0.1 percent to 158.20 per dollar by 3 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. It earlier depreciated to 158.40 per dollar.

The Central Bank of Nigeria sold $300 million to lenders at an auction today, compared with $276.6 million at the previous sale on March 25, the Abuja-based bank said in e-mailed statement. The regulator uses the sales to stabilize the naira as the cost of importing goods including refined fuel, which accounts for 70 percent of the local gasoline market, increases dollar demand and puts pressure on the currency.

“CBN’s increased intervention through the auction has ensured naira stays within the targeted band amid increased dollar demand,” Sewa Wusu, an analyst at Lagos-based Sterling Capital Ltd., said by phone.

The central bank aims to keep the currency of Africa’s biggest oil producer within a band of 3 percent above or below 155 naira per dollar.

In the week ahead, the naira may gain to 158.10 per dollar, “with bias for moderate appreciation due to monetary policy support,” Kunle Ezun and Kenneth Asenime, analysts at Ecobank Transnational Inc. in Lagos, wrote in an e-mailed note to clients today.

The yield on the country’s 16.39 percent domestic bonds due January 2022 dropped one basis point to 11.20 percent in the secondary market, according to yesterday’s data compiled on the Financial Markets Dealers Association website. Yields on Nigeria’s $500 million of Eurobonds due January 2021 rose one basis point to 4.323 percent today.

Ghana’s cedi gained 0.2 percent to 1.9370 per dollar in Accra, the capital.

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