Nigerian stocks hit 21-month high, driven by banks, naira gains

Nigeria stocks extended their rally for the fourth consecutive day on Friday, lifted to a 21-month high by gains in the banking sector while the local currency appreciated on the black market on improved dollar supply.
The banking index rose by 3.24 on Friday, while the overall market index jumped by 3.49 percent to 31,000 points, driven by gains in First Bank Holdings. 
Shares in First Bank rose to an 18-month high buoyed by hopes that foreign investors will return to Africa's biggest economy amid signs that it will leave recession soon as oil revenues have improved in recent months.
"There was a general demand push in the market with the gradual returns of foreign portfolio investors taking advantage of the low valuation of most banking stocks," said a senior stockbroker, Austin Egberi.
Stocks were also lifted by improved dollar supplies in the forex market.
The Nigerian naira rose on the black market on Friday to 375 a dollar from 382 per dollar, a level it had traded in the last two weeks. The naira closed at 305.50 to the dollar on the interbank market and was quoted at 381.33 at the investor window.
Nigeria's central bank has since February regularly injected dollars into the foreign exchange market to improve liquidity and narrow the spread between official and black market rates. The bank has sold close to $5 billion, which has helped to support the local currency.
Overnight Interbank lending rates dropped to 8 percent on Friday from 12.5 percent last week after the central bank repaid about 65 billion naira in matured treasury bills and credited lenders' accounts for surplus cash paid for forex purchases last week.
The stock market is expected to slow down next week as some domestic investors were likely to book profits from the recent rally in the market, traders said.
© Reuters News