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Naira rises against dollar

By on April 25, 2014

The naira rose against the dollar on Wednesday as Chevron’s local unit sold the United States currency and offshore funds bought local debt, foreign exchange market dealers said.

According to a Reuters report, the naira traded 0.34 per cent higher at N161.60 to the dollar on Wednesday afternoon, from Tuesday’s close of N162.15.

Dealers said Chevron sold about $18m to banks, while offshore investors participating in a debt auction on Wednesday sold an undisclosed amount of dollars.

The Central Bank of Nigeria was due to auction N200bn ($1.2bn) in treasury bills and bonds on Wednesday.

Offshore funds, dealers said, had renewed their appetite for Nigerian assets after the country rebased its Gross Domestic Product, overtaking South Africa as the continent’s biggest economy and making it a more attractive destination for investors.

The naira had about two weeks ago rallied to its strongest level in almost six weeks after the Nigerian National Petroleum Corporation sold some dollars to the local market.

The local currency closed at N162.90 to the dollar, the level last seen on February 18 when it closed at N162.50 to the dollar.

Oil producers, the NNPC are the biggest source of the dollar after the CBN, which offers foreign exchange at auctions on Mondays and Wednesdays to maintain local-currency stability.

The naira was the best performer among 24 African currencies tracked by Bloomberg in April, climbing 2.4 per cent.

The local currency has been sustaining a stable outlook after the CBN hiked the Cash Reserves Requirement on private sector deposits at the end of its Monetary Policy Committee in March.

Meanwhile, the external reserves have risen to $38.05bn, according to latest CBN data.

The reserves had dropped by 5.76 per cent month-on-month to $37.8bn on April 14.

However, the naira weakened in the first quarter of the year by 3.88 per cent to close at N165 to dollar in the interbank market, up from N158 at the beginning of the year.

A depreciation of 0.03 per cent was recorded in the official market by the end of the first quarter as the naira was sold at N155.74 to a dollar.

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