The naira strengthened for the first time in two weeks after Nigeria’s central bank sold the most dollars in almost two months to support the country’s currency.
The currency of Africa’s largest oil producer appreciated 0.1 percent to 158.80 per dollar as of 3:40 p.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
The Central Bank of Nigeria sold $200 million at a foreign- currency auction yesterday, the highest since March 21 sales, the Abuja-based bank said in an e-mailed statement. The central bank is the main supplier of foreign currency to the market through twice-weekly auctions and direct sales to lenders in the interbank market.
“The central bank is increasing dollar sales at auction and has sold directly to some lenders in the interbank market this week to cushion the effect of naira falling from companies repatriating dividends,” Sewa Wusu, currency analyst at Lagos- based Sterling Capital Ltd., said by phone today. “The naira has also been under pressure from rising inflation, but I think the central bank will be able to bring stability.”
Ugochukwu Okoroafor, a spokesman for the central bank, wasn’t immediately available for comments.
Inflation accelerated in the West African country to 12.9 percent in April, the fastest since October 2010, from 12.1 percent in March, the National Bureau of Statistics said May 15. The regulator last raised its policy rate to a record 12 percent in October to check inflation and stabilize the naira.
Yields on Nigeria’s Eurobonds due 2021 rose fifteen basis points to 5.762 percent in London.