Nigerian naira weakens at interbank, stable at auction
Category: Money Market
Wednesday November 16, 2011 2:37pm
The Nigerian naira currency weakened against the U.S dollar on the interbank market on Monday, but held steady at the bi-weekly currency auction even as strong demand for the greenback persisted on the interbank.
The local currency closed weaker at 158.75 to the dollar on the interbank market from 157.70 the previous day. "The naira closed stronger yesterday as a result of direct dollar sales by the central bank to some banks toward the close of the market," one dealer said.
Traders said the naira weakened on Wednesday even when the central bank cleared all demand at its bi-weekly auction because more airline companies and other major firms excluded from the official window are buying dollars.
On the official window, the central bank sold all the $333.82 million demanded at 154.50 to the dollar, more than its initial offer of about $250 million. The regulator sold only $250 million at 154.50 naira to the dollar at the previous auction.
Dealers said local unit of Exxon Mobil sold about $59.9 million to some lenders on Wednesday, but expect the impact to be felt in the market on Thursday.
Outlook for the local currency favour broad stability around 157.50-159 to the dollar depending on the sustenance of the regular direct dollar sales to the market by the central bank.
"The central bank has successfully curtailed the volatility in the market through its regular intervention, so we see the naira fluctuating between 157.50-159 figure in the near term," one senior trader with a local unit of a foreign bank said.