Monday November 21, 2011 2:12pm
The Nigerian naira eased against the U.S dollar on both the interbank market and at the bi-weekly auction on Monday as demand for the greenback outpaced supply.
The naira currency closed at 158.90 to the dollar on the interbank market compared with 158.65 on Friday as the central bank failed to meet all demand at the official window, putting further pressure on the currency available in interbank trading.
At the official window, demand surged to $419.22 million but the central bank sold only $250 million naira at 155.21 to the dollar. The central bank sold all the $333.82 million demanded at 154.50 to the dollar at its last auction on Wednesday.
"The market reacted to the shortfall in supply at the official window, but fear that the central bank could intervene in the market kept the rate within band at the interbank," one dealer said.
The central bank has, through its regular direct dollar sales to some lenders in recent weeks, reduced volatility in the market with the local currency trading within 157.50-159 band at the interbank market.
"We do not see the naira depreciating with a wide margin in the week because of the possible intervention in the market by the central bank," another dealer said.
Central bank Governor Lamido Sanusi told Reuters on Sunday the naira had reached the desired degree of stability.
Dealers said they do not expect any major shift in policy by the central bank towards the naira when Sanusi speaks at the end of a monetary policy committee meeting later on Monday.
Source: Reuters (Reporting by Oludare Mayowa)