6 September 2012

Nigeria: Naira Snaps Three-Day Decline On Forex Inflows, Increasing Reserves

The naira snapped three days of declines on dollar inflows and on bets the central bank will support the currency as reserves increased.

The currency climbed 0.1 per cent to N158.30 against the dollar in Lagos.

The naira has climbed 2.6 per cent this year, the best performer in Africa, according to data compiled by Bloomberg.

External reserves have risen 18 per cent this year to $38.9 billion, according to August 31 data compiled by the central bank. The regulator sold $200 million at a foreign currency auction on September 3, compared with $180 million at a sale on August 29.

"The naira is strengthened by foreign investments into treasury bills and the expectation that the central bank will support the currency against the backdrop of rising foreign exchange reserves," Edgar Ebinum, analyst at Lagos-based Cowry Asset Management Limited, said in a telephone interview yesterday.

The yield on Nigeria's seven per cent domestic bonds due 2019 rose 44 basis points to 13.96 per cent, according to September 4 data on the Financial Markets Dealers Association website. Yields on the nation's $500 million of Eurobonds due 2021 fell three basis points to 4.9 per cent today.

Ghana's cedi rose 0.2 per cent to 1.9315 a dollar in Accra, the capital yesterday.

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