Nigerian naira falls vs dollar to its weakest in 9-wks
Thursday December 8, 2011 10:47am
The Nigerian naira eased against the U.S dollar on Thursday to its weakest in nine weeks as robust demand for the greenback from some end-users stocking up for Christmas sales and those excluded from the official window overstretched supply.
The local currency was trading at 162.45 to the dollar on the interbank market, weaker than 161.70 to the dollar compared to Wednesday's close.
"Dollar inflow has thinned out in the market, while a number of people are covering their short positions, putting pressure on the available dollars," one dealer said.
Traders said the local unit of Chevron oil is selling about $35 million to some banks later in the day, while fellow oil company Agip is also selling $27 million, but that may not be sufficient to reduce pressure in the market.
At the official window on Wednesday, the central bank sold only $200 million at 156.70 to the dollar, short of the $245 million demanded but in line with the $200 million sold at 156.50 per dollar on Monday.
Traders said the low demand at the auction was not a true reflection of real demand for foreign exchange in the market as central bank officials continue to advise banks on the amount of dollars to be demanded and rates to reduce pressure on the bi-weekly auction.
The central bank moved its target trading band for the naira last month to +/-3 percent around 155 naira, from +/-3 percent around 150 due to prolonged naira weakness and high dollar demand.
"There is strong demand in the market and as long as the central bank fails to meet this demand, the naira will continue to depreciate in the near term," another dealer said.