Naira up as oil firms sell dollars, stocks down

The naira closed almost 1 percent higher against the U.S. currency on Monday, after three oil companies sold the greenback, increasing dollar liquidity on the interbank market, dealers said.

The unit closed at 181.20 naira to the dollar, firmer than Friday’s close of 183. The naira had weakened to 183 during mid-day trades before the dollar sales.

Dealers said China’s Addax and Itali’s Eni sold a combined $19 million while LNG sold an undisclosed amount of dollars to commercial lenders.

The central bank devalued the naira two months ago and in December tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle. The naira had been hard hit by falling oil prices, cutting foreign income for Africa’s largest crude producer.

The devaluation of its target band by 8 percent to 160-176 against the dollar was meant to halt the slide in foreign reserves, but the naira has traded well outside that band – and reserves are still falling.

Stocks have also been falling as foreign investors unnerved by the drop in oil prices exit frontier assets.

Nigeria’s main share index fell more than 2 percent on Monday, hit by further falls in oil and by election jitters.

Nigeria faces a presidential election in less than six weeks, with frontrunners President Goodluck Jonathan, a Christian from the south, and former military ruler Muhammadu Buhari, a northern Muslim, facing off in a contest many think is too close to call.