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Nigerian naira gains vs dollar on oil firms FX sales

Category: Forex

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Nigerian naira gains vs dollar on oil firms FX sales


Monday December 5, 2011 2:13pm

The Nigerian naira currency strengthened against the U.S dollar on the interbank market on Monday after energy companies sold about $91 million.

The naira closed at 161.30 to the dollar on the interbank market from 161.40 Friday's close due to the inflows from two energy firms.

Traders said local unit of Chevron sold about $66 million to some lenders, while Agip sold $25 million which provided some dollar liquidity and support for the local currency.

In the official window, The central bank sold $200 million at 156.50 to the dollar, short of the $229.14 million demanded and compared with $200 million sold at 156.31 to the dollar at the previous auction on Wednesday.

Traders said the central bank continues to indirectly control demand and the bid rate at its bi-weekly auction in a move to reduce pressure on the local currency and ensure stability around its trading band.

"Officials of the central bank usually called around before the auction and asked banks to limit their dollar demand to a specific amount and also that they should not quote above a certain rate otherwise their bids will be disqualified," a traders told Reuters.

The central bank last month moved its target trading band for the naira to +/-3 percent around 155 naira, from +/-3 percent around 150 due to prolonged naira weakness and high dollar demand.

"The naira will depreciate further in the coming days because dollar supply is not coming as much again, while demand remain strong," another dealer said.

Traders said if the central bank continue to sell dollars directly in the market, the naira could trend around 161-161.60 in the near term, otherwise, it will eased further.



Source: Reuters (Reporting by Oludare Mayowa)

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