Nigerian naira falls vs dollar, CBN closes FX window
Wednesday December 21, 2011 2:16pm
The Nigerian naira fell against the U.S dollar on Wednesday, to its weakest since Oct 10, as the central bank closed its official foreign exchange window for the year, putting pressure interbank market dollar supplies.
The naira currency eased to 163.30 to the dollar on the interbank, its weakest in 10 weeks from 162.35 the previous day.
"There is some demand in the market and the reality of the central bank closure of the official window for the year must have spurred some customers to buy dollars to edge against possible further depreciation in the coming days," one dealer said.
On the last bi-weekly forex auction for the year, the central bank sold $200 million at 156.70 to the dollar, a sum and rate it had maintained since last month. Demand at the auction was slightly higher at $218.08 million.
Traders said most forex end-users are of the view that the naira could depreciate further next year because of the recent shift in the central bank's trading band for the naira from +/- 3 percent around 150 to +/- 3 percent around 155 to the dollar.
"People are anticipating further depreciation of the naira next year and they are trying to bring forward their obligations in the hope that they can reduce the impact of future depreciation on their business," another trader said.
Traders said two oil company, local unit of Chevron sold $10.50 million and Addax $2 million to some lenders, but not sufficient to calm the market.
The naira is likely to continue to depreciate against the dollar in the near term as end-users scramble to cover their position and edge against future depreciation.