Wednesday November 30, 2011 1:57pm
Nigeria's local naira currency weakened against the U.S dollar on the interbank market on Wednesday, but strengthened at the bi-weekly auction after the central bank cleared all demand for the greenback at its official window.
The local currency closed at 161.20 to the dollar on the interbank market compared to 161.10 naira to the dollar on Tuesday.
Traders said the currency weakened to as 161.55 to the dollar at the interbank market intraday on strong dollar demand, but firmed to close stronger after the central bank and some oil companies sold dollars to selected lenders.
Dealers said local unit of Exxon Mobil sold around $50 million, while Royal Dutch Shell sold about $100 million to some lenders, which helped to calm the market toward the close of trading.
On the official window, the central bank sold all the $200 million demanded at 156.31 to the dollar, compared to $200 million at 157.26 to the dollar at the previous auction on Monday.
"Officials of central bank actually called some banks and asked them to reduce their bid at the auction to a specific amount in order to reduce pressure on the naira," one dealer said.
Dealers said outlook favoured continue depreciation of the naira in the near term, unless the central bank continues to intervene in the market to curtail pressure.
"Most of the oil companies are done with their month-end dollar sales, so the market will depend largely on dollar inflow from the central bank direct sales to meet growing demand at the market," another dealer said.
Source: Reuters (Reporting by Oludare Mayowa)