Naira rallies to seven-week high buoyed by dollar sales from oil firm, offshore funds

The Nigerian currency the naira rallied to a 7-week high on Tuesday, after the local unit of ExxonMobil sold $50 million to some lenders and offshore funds bought the local currency to participate in a debt auction, dealer said.

The local unit closed at 161.90 naira, a level last seen on May 22, when it closed at 161.81. The naira was up 0.24 percent on Tuesday, compared with Monday's close of 162.28.

Volatile oil earnings, falling dollar reserves, delayed upside from the power reforms, among other factors have combined to upset naira's exchange rate stability.

Naira which traded N150 band for long after the volatility of 2009 occasioned by the World financial crisis, has struggled to stabilize at N160 region for many months now.

Attempts by the CBN to defend the naira, has resulted in the depletion of dollar reserves and fiscal buffers have been falling, with the Excess Crude Account (ECA), down to $2.28 billion (Dec. 2013) from $8.65 billion (Dec. 2012) and FX reserves down 9.7 percent from its 2013 highs to $43.2 billion (Jan. 15).