By Emele Onu, 05.06.2010

The Nigerian currency, the naira dropped marginally in value yesterday, which was the first auction day after the workers’ day holiday. Naira was also found on the downside at the inter-bank market; a development trader attributed to shortfall in supply at the official wholesale dutch auction system (WDAS).The local currency fell to N148.81 to one dollar against the N148.61/$1 it closed before the holiday last week, which indicated 20 kobo depreciation.

At the inter-bank market, the naira fell marginally to N151.07 to one dollar against N151/$1 it was last Tuesday.  It was stable at the parallel market at N152/$1.The country’s external reserves, which as at April 15 was $41.51 billion, showed a drop to $40.1 billion, according to data by the Central Bank of Nigeria (CBN) yesterday.

The foreign exchange position fell by 2.9 per cent to $40.30 billion at the end of April, down from $41.51 billion on April 15. But the CBN maintained “the reserves remain robust and well above the three-month internationally recommended import cover requirement.” According to the details of the WDAS auction conducted by the CBN yesterday, it sold $450 million, which was up from the usual $250 million it used to supply the market. CBN offered a much higher amount of dollar yesterday to cover for the gap created by the closure of the market last Monday for holiday.

THISDAY gathered however, that the extra supply by the CBN was not enough to cover the demand by dealer banks, which amounted to $681 million. “The naira depreciated at the inter-bank as banks struggled to cover up for the gaps created at the WDAS,” one of the traders said. It is speculated that naira may depreciate further today at the inter-bank market as dealers try again to cover for the shortfall in supply at yesterday’s auction.As a boost to the market liquidity, the Nigerian National Petroleum Corporation (NNPC), it was gathered, sold an additional $150 million to banks last Tuesday.

(Source:ThisDay)