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Nigerian naira gains vs dollar on oil firms forex sales

Category: Forex

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Nigerian naira gains vs dollar on oil firms forex sales


Wednesday January 4, 2012 1:28pm

The Nigerian naira firmed against the greenback at the interbank market on Wednesday, owing to dollar sales by local units of multinational oil companies to lenders in Africa's second biggest economy, dealers said.

The local unit closed at 159.55 naira to the U.S. dollar on the interbank on Wednesday, up from Tuesday's close of 160.20. It had touched an intra-day low of 163.05 naira on Tuesday.

Dealers said Chevron sold $105 million, ExxonMobil sold $24.04 million, while Total sold $24 million to lenders, increasing the dollar supply to the interbank market, which helped support the local currency.

At the official window, the central bank sold $300 million at 156.71 naira to the dollar, its first auction of the year, but did not disclose the level of demand as it normally does.

It auctioned $200 million at 156.70 naira on Dec. 21, its last auction in 2011, on $218 million demand.

"I see they are trying to improve liquidity. In the past five auctions, they sold only $200 million. But now they didn't give us the demand figure, it's very difficult to analyse what CBN intends to do," one currency trader told Reuters.

"Assuming they didn't meet demand at the auction, then that will send the wrong signal to the market."

The naira lost 4.46 percent of its value in 2011, owing to prolonged currency weakness and strong dollar demand that also prompted the central bank to move its target trading band for the unit in Nov. 28 to the 150-160 naira range, from 145-155 naira before.


Source: Reuters

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