Naira Gains on Surplus Dollar Inflows From Auctions, Crude Sales

The naira advanced as dollar supply from auctions and month-end crude oil companies’ sales produced a surplus of the U.S. currency in the interbank market.

The currency of Africa’s biggest oil producer strengthened by less than 0.1 percent to 157.6 per dollar as of 1:33 p.m. in Lagos, the commercial capital. The naira has appreciated 3.2 percent against the dollar this year, the second-best among African currencies, according to data compiled by Bloomberg.

Nigeria will offer 140.6 billion naira ($895 million) of Treasury bills at an auction on April 26, the central bank said April 18. The West African nation also plans to sell 90 billion naira of bonds on April 25, according to the debt management agency. The bank is the largest supplier of foreign exchange followed by the country’s crude oil exporters.

“The naira has sustained a strengthening trend as the interbank market is awash with dollar liquidity,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Africa strategists at Rand Merchant Bank in Johannesburg, wrote in a report today. It “tends to prevail at month-end when top oil producers sell dollar proceeds,” the report said.

Foreign-exchange reserves in Africa’s biggest oil producer jumped 10.2 percent this year to $36.2 billion as of April 19, according to data compiled by the bank. Oil prices have risen 11 percent since the beginning of this year.

The inflation rate declined to 11.9 percent in February from 12.6 percent a month earlier, according to the National Bureau of Statistics. The central bank kept its benchmark interest rate unchanged at a record high of 12 percent for a third meeting on March 20.

Bond Yields
“We expect to see stability and possible appreciation of the naira due to anticipated dollar inflows from foreign portfolio investors in the forthcoming auctions,” analysts at Lagos-based Cowry Asset Management Ltd., led by Edgar Ebinum, said an e-mailed note to clients today.

The yield on Nigeria’s $500 million of dollar bonds due 2021 was unchanged at 5.434 percent in London. Borrowing costs of domestic bonds due 2015 declined one basis point to 15.14 percent, according to the April 20 data on the Financial Markets Dealers Association website.

Ghana’s cedi appreciated less than 0.2 percent to 1.8288 per dollar in Accra, the capital, strengthening for a second day.

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