Naira Gains Three-Month High on Dollar
The naira gained to the strongest level in more than three months as oil companies sold dollars on concern it may weaken further due to continued inflows of the U.S. currency and lower demand from importers.
The currency of Africa’s biggest oil producer appreciated 0.2 percent to 157.30 per dollar as of 11:45 a.m. in Lagos, the commercial capital. A close at this level would be the strongest since Nov. 3, according to data compiled by Bloomberg.
“Oil companies were initially supplying dollars only at the end of the month but this has changed due possibly to fear of losses as dollar demand whittles down,” a development that continues to strengthen the naira against the U.S. currency, Edgar Ebinum, analyst at Lagos-based Cowry Asset Management Ltd., said in e-mailed response to questions. “We believe the naira will remain strong against the dollar on continued dollar inflows from the oil industry.”
The Central Bank of Nigeria offers dollars at twice-weekly auctions and interbank trading to maintain exchange rate stability. The oil industry is the second major source of dollar supplies in the country after the central bank, which will hold its auctions today and Feb. 22. Foreign exchange reserves stood at $35 billion as of Feb. 16, compared with $34.3 billion a year ago, according to central bank data.
“Persistent dollar inflows into the interbank market continues to support a downward trend in dollar against the naira,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Africa analysts at Rand Merchant Bank in Johannesburg, wrote in an e- mailed note today.
Ghana’s cedi appreciated for the third straight day, up 0.2 percent to 1.7003 per dollar, in Accra, the capital.
Author: Chief Editor
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