Naira strengthens on dollar sale from oil companies

The Naira climbed against the Dollar for a second day on speculation that oil companies operating in the West African country sold dollars to fund local operations.

The currency of Africa’s biggest oil producer strengthened less than 0.1 per cent to N157.21 per dollar in Lagos, the commercial capital, according to data compiled by Bloomberg.

The Head of Research, Sterling Capital Limited, Mr. Sewa Wusu, said, “Some sales by oil companies provided some support. Foreign inflows into a scheduled central bank treasury bill sale on Thursday will probably add to the naira’s gains.”

Oil companies periodically sell dollars to banks to meet local spending needs and are the second-biggest source of foreign currency after the CBN’s twice-weekly auctions, which are used to help stabilise the naira.

Banks bought the entire $150m offered on Wednesday. The regulator sold $120m on January 30, the smallest amount in three auctions. The CBN said it would sell N184.3bn T-bills on Thursday.

The yield on the country’s 16.39 per cent domestic bonds due January 2022 declined eight basis points to 11.12 per cent in the secondary market, according to data compiled on the Financial Markets Dealers Association website.

Borrowing costs on Nigeria’s $500m of Eurobonds due January 2021 rose two basis points to 4.07 per cent on Wednesday.



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