Nigeria's stock market was on track for its strongest weekly gain for 11 months on rising volumes as local funds piled into equities in the hope that foreign investors will return with liquidity in the currency market improving, analysts say. The stock index rose 3.18 percent to cross 28,000 points on Thursday, gaining for the 10th straight day. The rally helped the index erase year-to-date losses after stocks finished 6.2 percent down last year.

Two weeks ago Nigeria's central bank allowed investors to trade the naira at market-determined rates as it tries to improve dollar supply and lure back the foreign funds who bolted from Africa's biggest economy when capital controls were imposed in 2015. Those curbs remain in place but are being eased. This week, the naira traded at about 400 to the dollar in the window for investors, similar to its parallel market rate. Foreign investors have welcomed the moves but are only tiptoeing back into a market they once favoured until they are convinced of currency flexibility.

"The widely held view that the economy is on the road to recovery ... with improved oil prices, production and dollar liquidity is enhancing market sentiment," Olalekan Olabode, head of research at Vetiva Capital. Olabode added that a new regulation allowing pension funds to invest more in equities could also account for the rally. Analysts say this week's gain could mark the beginning of a sustained rally as stocks bottom out and corporate earnings beat market expectations as long as the central bank sustains its dollar supply.

Copyright Reuters, 2017