1 February 2013

Nigeria: Naira Firms On Month-End Dollar Sales

The naira climbed the most in almost a week against the dollar on expectations of month-end foreign- currency sales by oil companies operating in the country to meet local expenses.

The currency rose 0.2 per cent to 157 a dollar, poised for the biggest gain on a closing basis since January 25, according to data compiled by Bloomberg.

"The normal month-end sales by the oil majors will give some support," Sewa Wusu, head of research at Sterling Capital Limited said. The naira fell on Wednesday after the Central Bank of Nigeria (CBN) reduced foreign-exchange supply at auction "and that was not anticipated," he said.

The naira has gained from foreign-currency inflows to oil companies investing in the country's hydrocarbons and portfolio funds, CBN Governor Lamido Sanusi said after keeping the benchmark interest rate unchanged for the eighth time on January 21.

Oil companies periodically sell dollars to lenders to meet local spending needs and are the second-biggest source of foreign currency after the apex bank's twice- weekly auctions. The regulator sold $120 million at a foreign currency auction yesterday, the lowest in three auctions.

The yield on the country's 16.39 per cent domestic bonds due January 2022 increased three basis points to 11.26 per cent in the secondary market yesterday.

Borrowing costs on Nigeria's $500 million of Eurobonds due January 2021 were little changed at 3.884 percent yesterday.

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