Nigeria’s Naira Gains Most in 2-Years on Foreign-Currency Rule

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Nigeria’s Naira

Nigeria’s Naira

Nigeria’s naira gained the most in two years against the dollar in interbank trading after the central bank stopped foreign-currency purchases by oil-exporting companies at its twice-weekly auctions.

The currency of Africa’s biggest oil producer strengthened by 2.44 percent to 160.15 per dollar at 4 p.m. in Lagos, the biggest intraday appreciation since Oct. 2, 2009, according to data compiled by Bloomberg. The central bank yesterday banned companies that export crude oil from the auctions, directing them to use their export proceeds to meet their dollar needs.

“Traders speculate that dollar demand will fall next week due to the new rule,” Babatunde Obaniyi, an analyst at Greenwich Trust Ltd., a Lagos-based investment company, said today by phone.

The central bank has been using foreign-currency reserves to keep the naira within a 3 percentage-point band above or below 150 per dollar at its twice-weekly auctions. It broke that band the second time on Oct. 5, after it failed to meet mounting dollar demand for the 24th straight auction.

Before the new rule was announced yesterday, the naira depreciated by 1.7 percent to 164.15 per dollar, the weakest since at least 1994, when Bloomberg started compiling the data.

To contact the reporter on this story: in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

 

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