Naira advances to one week high

The naira climbed the most in more than a week against the dollar on speculation that the Central Bank of Nigeria would continue to support the currency by dipping into its rising foreign reserves.

The currency advanced as much as 0.2 per cent, before trading 0.1 per cent stronger at N158.4 per dollar in Lagos, the biggest gain on a closing basis since March 22, according to data compiled by Bloomberg.

Nigeria’s foreign-currency reserves have advanced 38 per cent to $48.5bn in the year through March 20. The Governor, CBN, Mr. Lamido Sanusi, pointed out that the CBN had enough to defend the naira, saying, “We have enough reserves to keep the naira where we want.”

Economist at Renaissance Capital, Johannesburg, Mrs Yvonne Mhango, said, “We believe the sizable arsenal of foreign-exchange reserves that the CBN has built up over the past 15 months as well as firm monetary policy will help keep the exchange rate in the target range of N150 to N160 per dollar in 2013.”

Sanusi said he wanted to keep the benchmark interest rate unchanged at a record high even as more policy makers argue for cuts amid calls from the government and businesses to lower borrowing costs.

Three Monetary Policy Committee members voted for a reduction on March 19, compared with two in January.

Yields on the government’s local-currency bonds due June 2019 dropped 24 basis points, or 0.24 percentage point, to 10.96 per cent, according to March 28 prices compiled by the Financial Markets Dealers Association. Nigerian markets were closed for holidays on March 29 and April 1.

Borrowing costs on Nigeria’s $500m of Eurobonds due January 2021 declined three basis points, or 0.03 percentage point, to 4.326 per cent on Tuesday. Ghana’s cedi rose 0.6 per cent to 1.9275 per dollar in Accra.