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Naira heads for 2-week high on expected dollar sales

By on March 26, 2013

The naira gained for a third day and headed for its strongest in more than two weeks on speculation that the country will sell dollars to meet month-end expenses.

The currency rose less than 0.1 per cent to N158.15 per dollar, poised for the highest close since March 8, according to data compiled by Bloomberg. Oil producers, which sell dollars to meet local expenses around the end of the month, are the second-biggest source of foreign currency after the Central Bank of Nigeria.

The CBN sells dollars at auctions on Mondays and Wednesdays to help manage the exchange rate.

“We anticipate appreciation of the naira in the forex market amid dollar sales by multinationals to meet month-end obligations,” analysts at Cowry Asset Management Limited led by Edgar Ebinum, told investors yesterday.

The yield 16.39 per cent domestic bonds due January 2022 dropped four basis points to 11.20 per cent in the secondary market, according to March 22 data compiled on the Financial Markets Dealers Association website. Yields on the $500m of Eurobonds due January 2021 declined nine basis points to 4.24 per cent.

Meanwhile, a U.K. based oil and gas company focused on West Africa and Iraq, has said it will expand reserves by 29 per cent after increasing its stake in a Nigerian explorer.

Proven and probable reserves will climb to 270 million barrels of oil equivalent from 210 million barrels, the London- based company said yesterday in a statement.

Afren agreed to pay about $37m for 10.4 percent of First Hydrocarbon Nigeria Company, raising its stake to about 55 per cent. Oil companies are adding reserves to gain from a four-year increase in prices and Nigeria accounted for 92 per cent of Afren’s sales in 2011, data compiled by Bloomberg showed.

The country provides cash to invest in other regions including East Africa and the Middle East. The Chief Executive Officer of the company, Mr. Osman Shahenshah said, “We are currently drilling very exciting wells in Kurdistan, which are going very well. In Africa, the company is adding a whole suite of wells in Kenya, Tanzania and Madagascar.”

Afren advanced as much as 3.2 per cent to 152.3 pence in London trading, the highest in a month. The stock was at 152 pence as of 9:59 a.m. local time, extending its gain this year to 16 per cent.


( NationalMirror)