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NNPC dollar sales strengthen naira

By on July 12, 2011

The naira firmed against the U.S. dollar on Monday, buoyed by the sales of around $400 million by Nigerian National Petroleum Corporation (NNPC) to selected banks on Friday.

The naira closed at N151.80 to the dollar compared to N152.55 at Friday’s close.

The Central Bank of Nigeria (CBN) sold $300 million at N150 to the dollar, slightly below the $319 million demanded and compared to $310.38 million sold at N150.50 a dollar at last Wednesday’s auction.

The NNPC sold a first tranche of its monthly dollar floats to the CBN last week after the energy firm failed to reach agreement on pricing with the selected banks it had initially offered the dollars.

Traders said the energy firm sold the second tranche of its dollars to some banks on Friday, helping to provide support for the naira at the interbank market.

The state energy company sells dollars to some banks on a monthly basis and transfers the naira proceeds to its account with the apex bank.

“We see the naira trading around the same level for the rest of the week since the market is still very liquid and the central bank is willing to meet all demand at its auction,” dealer said.

Meanwhile Federal Government has concluded plans to sell N70 billion ($458.7 million) in 3-, 5- and 10-year sovereign bonds on July 20, its seventh debt auction of the year.

According to the Debt Management Office (DMO), it would sell N30 billion of the three-year, 15 billion naira of five-year and N25 billion of 10-year papers, due to mature in 2014, 2015 and 2018 respectively.

All the papers are re-openings of previous issues and the results of the auction would be published the following day.

The Federal Government issues sovereign bonds monthly to support the bond market, create a benchmark for corporate issuance and fund its budget deficit.