Naira appreciates on CBN intervention

The naira closed at a two-week high against the dollar on Friday, firming 0.38 percent on the day thanks to dollar sales by two oil companies and central bank intervention to support the currency, traders said. The naira closed at N158.30 to the U.S. dollar and firmer than Thursday’s closes of N158.90. It rose to N157 intraday on Friday.
The naira has faced selling pressure in recent months from foreign investors exiting local bonds due to falling yields and from importers buying the dollar. “The naira appreciated because of dollar sales by two energy firms and the central bank today,” a dealer said. French Total’s Nigerian unit sold $80 million while Agip sold $8 million, helping boost the naira. The central bank sold an unspecified amount of dollars to some banks, traders said.

It was the central bank’s second direct intervention in the market in just over a week to calm the volatile naira and drain liquidity to check inflation, traders said. Prior to intervening last Friday the central bank had been absent from the market for nearly a year as the currency had been relatively stable. Foreign investors have been pulling out of local bonds as yields fell close to inflation levels after JP Morgan added Nigeria to its emerging debt index last October, putting pressure on the naira which has increased recently. Traders expect the naira to strengthen further next week on the back of more dollar supply from oil companies as part of their month-end sale of hard currency to fund domestic obligations.