The naira rose for a third day to the highest in three weeks as oil companies were said to sell dollars to meet local expenses.
The currency climbed 0.1 per cent to N157.87 per dollar in Lagos, the commercial capital, the highest on an intraday basis since March 14, according to data compiled by Bloomberg. The currency’s declined 1.1 per cent this year.
The Head of Research at Sterling Capital Limited, Mr. Sewa Wusa, said, “Some companies sold some undisclosed amount of dollars. If sales continue, we’ll definitely see some more strength.”
Oil companies are the second-biggest source of the currency after the Central Bank of Nigeria, which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability.
The CBN sold $237m at an auction on Wednesday, compared with $300m at the previous sale on March 27. It didn’t hold an offer on April 1 because of a public holiday.
Nigeria’s foreign-currency reserves have risen 10 per cent this year to $48.7bn to April 2, according to data compiled by the CBN. Bonny Light crude, the nation’s main export grade, is priced above this year’s $79 budgeted benchmark set by the government at $110.26 a barrel.
Strategists at FBN Capital Limited, Gregory Kronsten and Olubunmi Asaolu, wrote in e-mail note, “Provided that the oil price obliges, in our view the CBN will be able to hold the line on the naira exchange rate this year. Reserves at end-March provided cover for more than nine months’ imports of goods, and close to seven months when we include services.”
Data compiled by the Financial Markets Dealers Association showed that yields on the government’s local-currency bonds due June 2019 rose eight basis points, or 0.08 percentage point, to 10.73 per cent.
Borrowing costs on Nigeria’s $500m of Eurobonds due January 2021 declined six basis points to 4.31 per cent on Thursday.