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Naira Gains on Investor Inflows, Oil Industry Supply

By on October 30, 2012

The naira strengthened as offshore investors bought the nation’s short-term debt and oil companies sold dollars to lenders.

The currency of Africa’s largest oil producer gained less than 0.1 percent to 157.20 per dollar as of 11:09 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg. The naira has strengthened 3.2 percent this year, the second- best performer in Africa.

Nigeria sold 111.27 billion naira ($708 million) of 91-day, 182-day and 364-day Treasury bills at an auction last week, the Central Bank of Nigeria said today in an e-mailed statement. Oil producing companies, which sell dollars toward the end of the month to meet domestic expenses, are the second-biggest source of the currency after the central bank.

“The naira continues to receive some support in foreign inflows from the global search for yield,” Vetiva Capital Management Ltd. analysts led by Adedayo Idowu wrote in an e- mailed note today.

Debt sold included 34.88 billion naira of 91-day bills at a yield of 12.88 percent and 45 billion naira of 182-day debt at 13.25 percent, according to the central bank. Yields on Nigeria’s 16.39 percent debt maturing January 2022 fell four basis points to 13.34 percent, according to Oct. 24 data on the Financial Markets Dealers Association website.

“Besides inflows to government securities, the market is witnessing month-end sales from a number of oil companies,” Tunde Ladipo, chief executive officer of Lagos-based Valuechain Investment Ltd., said by phone today.

The central bank will sell the U.S. currency at an auction today and on Oct. 31 to stabilize the naira within a 3 percent band around 155 per dollar.

Rates on Nigeria’s $500 million of Eurobonds due January 2021 fell two basis points to 4.539 percent today.


Source: Bloomberg