Naira Snaps Three Days of Declines as Crude, Reserves Advance
The naira climbed against the dollar, snapping three days of declines as crude prices and the nation’s foreign exchange reserves, increasing confidence the central bank can manage its stability.
The currency of Africa’s biggest oil producer rose 0.1 percent to 157.85 a dollar as of 2:32 p.m. in Lagos, the commercial capital. The naira has risen 2.8 percent this year, the best performer in Africa, according to data compiled by Bloomberg.
Nigerian benchmark Bonny Light crude, which has risen 29 percent from a June low this year, climbed for fifth day rising 0.1 percent to $116.37 per barrel. The country’s foreign reserves rose to a more than two year high of $40.2 billion on Sept. 11, according to data compiled by theCentral Bank of Nigeria.
“We expect increased stability in the interbank market,” Lagos-based ARM Securities Ltd. wrote in an e-mailed report. “Due to factors largely beyond the CBN’s control, the outlook for the naira has brightened considerably in recent weeks.”
The yield on Nigeria’s 7 percent domestic bonds due October 2019 fell 12 basis points, or 0.12 percentage point, to 13.24 percent, according to yesterday’s data on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 fell less than one basis point to 4.823 percent.
“There are consistent foreign flows into the bond market that have provided support,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in an e- mailed reply to questions today. The naira “should perform well in coming weeks,” he said.