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Naira Gains To 1-Month High As Central Bank Meets Dollar Demand

By on July 10, 2012

The naira strengthened to the highest in more than a month, gaining for a third day, as the central bank auctioned dollars and oil companies were said to sell the greenback.

The currency of Africa’s largest oil producer appreciated 0.1 percent to 160.68 per dollar as of 3:56 p.m. in Lagos, the commercial capital, its strongest on a closing basis since June 1, according to data compiled by Bloomberg.

The Central Bank of Nigeria sold $163.5 million at a foreign-currency auction today, less than the $200 million on offer, at a marginal rate of 155.87 naira per dollar, the Abuja- based bank said in an e-mailed statement. The regulator also sells dollars directly to lenders at interbank market to support the naira. The oil industry, which sells to lenders around the month-end to meet local expenses, is the second major supplier after the central bank.

“The central bank has been providing support to the naira through the auction and direct intervention at the interbank market,” Access Bank analysts led by Tony Monye and Michael Ndiomu wrote in a note to clients today. “Chevron Corp. (CVX) and Addax Petroleum sold $50.1 million on July 6 which is supporting the naira.”

“Dollar sales by oil firms bolstered liquidity on the interbank market last week, helping to alleviate depreciatory pressure on the naira,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, strategists at Rand Merchant Bank, wrote in a report today.

Foreign-currency reserves, which rose 10 percent this year, retreated to $36.571 billion, according to the latest figures from the central bank dated July 5.