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Naira Strengthens After Central Bank Sells Dollars

By on June 27, 2012

Nigeria’s naira appreciated against the dollar after central bank sold the U.S. currency in the second of its twice-weekly auctions.

The currency of Africa’s biggest oil producer appreciated 0.1 percent to 162.60 naira per dollar in interbank trading as of 3:40 p.m. in Lagos, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $350 million at a foreign- currency auction today, matching the amount sold on June 25, at 155.94 naira per dollar, the Abuja-based bank said in an e- mailed statement. The regulator supplies dollars to the market on Mondays and Wednesdays to support the naira.

“The auction by the central bank gave support to the naira, even as dealers are still expecting supply from some oil companies,” Abubakar Muhammed, chief executive of Lagos-based Forward Marketing Bureau de Change Ltd., said by phone today.

The oil industry, which sells dollars to lenders around the end of each month, is the second major supplier of the currency after the central bank.

Nigeria’s inflation rate fell to 12.7 percent in May from 12.9 percent in April, the National Bureau of Statistics said June 19, staying above the central bank’s target and adding to expectations interest rates will remain unchanged at a record high of 12 percent.

The yield on Nigeria’s domestic 15.1 percent bonds due 2017 rose to a record, gaining eighteen basis points to 15.89 percent, according to the June 26 data on the Financial Markets Dealers Association website.

Yields on the nation’s $500 million of Eurobonds due 2021 fell ten basis points to 5.5785 percent today.