The naira climbed the most in more than a week against the dollar on speculation that the central bank will continue to support the currency by dipping into its rising foreign reserves.

The currency of Africa’s biggest oil producer advanced as much as 0.2 percent, before trading 0.1 percent stronger at 158.4 per dollar by 11:45 a.m. in Lagos, the commercial capital, the biggest gain on a closing basis since March 22, according to data compiled by Bloomberg.

Nigeria’s foreign-currency reserves have advanced 38 percent to $48.5 billion in the year through March 20. The Central Bank of Nigeria has enough to defend the naira and “keep it where we want,” Governor Lamido Sanusi said in a March 24 interview in Lagos.

“We believe the sizable arsenal of foreign-exchange reserves that the central bank has built up over the past 15 months as well as firm monetary policy will help keep the exchange rate in the target range of 150-160 per dollar in 2013,” Yvonne Mhango, a Johannesburg-based economist at Renaissance Capital, wrote in a report today.

Sanusi said he wants to keep the benchmark interest rate unchanged at a record high even as more policy makers argue for cuts amid calls from the government and businesses to lower borrowing costs. Three Monetary Policy Committee members voted for a reduction on March 19, compared with two in January.

Yields on the government’s local-currency bonds due June 2019 dropped 24 basis points, or 0.24 percentage point, to 10.96 percent, according to March 28 prices compiled by the Financial Markets Dealers Association. Nigerian markets were closed for holidays on March 29 and April 1.

Borrowing costs on Nigeria’s $500 million of Eurobonds due January 2021 declined three basis points, or 0.03 percentage point, to 4.326 percent today.

Ghana’s cedi rose 0.6 percent to 1.9275 per dollar in Accra.

Source: Bloomberg (by Chris Kay)