Naira Gains Most in 18 Months as Bank Sells DollarsEmele Onu
Nigeria’s naira snapped four days of declines and gained the most in 18 months as the central bank was said to sell dollars to lenders and inflation in Africa’s second-biggest economy slowed.
The currency of the continent’s biggest crude producer strengthened 1.6 percent to 160 per dollar by 3:20 p.m. in Lagos, the commercial capital, its biggest gain on a closing basis since Dec. 26, 2011, according to data compiled by Bloomberg.
The Central Bank of Nigeria sells dollars at auctions on Mondays and Wednesdays to support the naira and occasionally offers currency directly to lenders to reduce demand. The Abuja-based regulator sold $300 million at an auction today, matching the amount given on June 10, it said in e-mailed statement. The naira retreated 1.9 percent last week, the worst five-day drop since Dec. 26, 2011.
“Besides the regular forex auction, the central bank sold dollars directly to some banks, which helped strengthen the naira,” Kunle Ezun, an analyst at Ecobank Transnational Inc. in Lagos, said by phone, without giving details.
Two calls made to the office of Ugochukwu Okoroafor, a spokesman for the central bank, didn’t connect.
Nigeria’s inflation rate fell to 9 percent in May from 9.1 percent in April, the National Bureau of Statistics said yesterday. The central bank held its benchmark interest rate at a record 12 percent for the 10th consecutive meeting on May 21, to check inflation and stabilize the naira.
“We see the risks to 2013 inflation as fairly balanced with headline inflation to average 9.2 percent,” Adedayo Idowu, an analyst at Vetiva Capital Management Ltd. in Lagos, said in e-mailed note today.
Yields on Nigeria’s $500 million Eurobonds due January 2021 rose seven basis points to 5.32 percent. Borrowing costs on local-currency debt due January 2022 fell six basis points to 13.87 percent on June 14, according to data compiled by Bloomberg.