The Nigerian naira weakened against the U.S dollar on both the interbank market and at the official central bank window as demand for the greenback continue to outweigh supply, traders said on Monday.
The naira currency eased to 160.20 to the dollar on the interbank, compared to 159.65 a dollar close on Friday.
Traders said the local currency eased to 160.60 to the dollar intraday after results of the bi-weekly auction showed a supply gap, but later firmed as the central bank sold dollars directly to some lenders to curtail pressure on the naira.
On the official window, the central bank sold only $200 million at 157.26 to the dollar, short of the $315.63 million demanded. The regulator sold $250 million at 156.21 naira to the dollar at the previous auction on Wednesday.
The central bank moved its target trading band for the naira last week to +/- 3 percent around 155 naira, from +/- 150 due to prolonged naira weakness and high dollar demand.
"There is still strong demand in the market and unless the central bank continues to intervene by selling dollars directly to the market, the naira will continue to be under pressure," one dealer said.
Traders said the central bank came to the market shortly before the close of business with unspecified amount of dollars, sold to some lenders, which helped to calm the market.
"It all depends on the central bank's willingness to support the market with regular intervention, otherwise the naira will continue to weaken," another dealer said.