Nigerian naira falls vs dollar on strong FX demand
Monday December 19, 2011 2:18pm
The Nigerian naira weakened against the U.S dollar on Monday as demand for foreign exchange remains unabated as the sales of $350 million by the state-run energy firm NNPC to some lenders on Friday failed to strengthen the market further.
The currency closed at 162.30 to the dollar on the interbank market, weaker than the 161.70 to the dollar on Friday.
Traders said the unexpected sales of $350 million by NNPC on Friday to some lenders help provided immediate support for the local currency but strong demand for the dollar has taken out the forex supply and pushed the naira back to its weak position.
"The naira opened the market weaker today (Monday) after the effect of the dollar sales by the NNPC wears out as demand remain strong in the market," one dealer said.
Traders said the inability of the central bank to meet all demand at its auction also impacted the naira negatively in the market.
On the bi-weekly auction, the central bank sold $200 million at 156.70 to the dollar, less than the $217.77 million demanded, but same figure and rate at the previous auction last Wednesday.
"The naira will likely remain unchanged this week as the central bank is yet to announce the closure of its window for the year, while some oil firms are still expected in the market before the end of the year," another dealer said.