Nigerian Naira Strengthens on Dollar Sales Bets, Bank Supply
Nigeria’s naira strengthened as the central bank sold dollars at an auction and amid speculation oil-producing companies are beginning month-end sales of the U.S. currency.
The currency of Africa’s biggest oil producer climbed 0.1 percent to 157.55 a dollar as of 3 p.m. in Lagos, the commercial capital, after weakening 0.1 percent on Nov. 23. The naira has appreciated 3 percent this year, the second-best performing currency tracked by Bloomberg in Africa.
Oil-producing companies, which sell dollars to meet domestic expenses around the month-end, are the second-biggest source of foreign currency after the Central Bank of Nigeria, which sells dollars to lenders at auctions on Mondays and Wednesdays to help manage the exchange rate. The regulator sold $200 million at its auction today.
“We expect stability on the naira as oil multinationals sell dollars for month-end purposes,” analysts at Cowry Asset Management Ltd. Led by Edgar Ebinum wrote in an e-mailed note.
The naira’s appreciation could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, central bank Governor Lamido Sanusi said Nov. 20, after the regulator held its benchmark rate at a record-high 12 percent.
Inflation, which accelerated for the first time in four months to 11.7 percent in October on widespread flooding of farms, is still above the bank’s target of less than 10 percent.
Yields on 10-year naira debt rose 14 basis points to 12.35 percent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 declined nine basis points to 4.322 percent.
Ghana’s cedi weakened for a fifth day, slipping less than 0.1 percent at 1.8991 a dollar in Accra, the capital.
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