LAGOS: Nigeria's naira firmed 0.88 percent on Friday, after the central bank stepped up dollar sales to try to support the currency, under pressure as the price of oil, the country's main revenue earner tumbled to a four-year low.
However, although the central bank has spent billions of dollars this week in interventions, the naira is still worth 2.7 percent less against the dollar than when the week started and remains outside the bank's preferred trading band.
In the latest session, the unit had initially weakened to 173.77 naira against the greenback, as oil prices plunged and foreign investors exited domestic financial markets.O/R Yields on the government's three-year paper jumped 52 basis points to 13 percent on Friday while the stock market, which had shed almost 1 percent, reversed earlier losses. Its biggest listed company, Dangote Cement, which accounts for a third of the index, climbed 10 percent for the second day.
The central bank, which has sold the US dollar directly onto the interbank forex market during the past week, stepped up its dollar sale on Friday, asking 21 commercial lenders to bid for $3 million each in a move to prop the local currency.
It had sold $2 million each in earlier interventions. But even after five interventions this week, the currency closed at 171.10 on Friday, firmer than Thursday's close of 172.60 but outside its preferred band of 150-160 naira, which it burst of it in May.
The bank has said it still wants to keep the trading band. Figures on the bank's web site show liquid reserves had declined by $5.77 billion or 15.7 percent this year to $36.69 billion by Nov. 11, from $42.46 billion at the start of the year.
That is about $26.6 million a day. The naira has lost 7.2 percent so far this year.
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