Nigeria naira falls vs dollar on surge in FX demand
Wednesday March 28, 2012
The Nigerian naira weakened against the U.S dollar on the interbank market on Wednesday, as strong demand by fuel importers outweighed dollar inflows from energy companies, traders said.
The local currency however, managed a slight gain at the bi-weekly foreign exchange auction, closed at 156.01 to the dollar from 156.06 at the previous auction on Monday.
The naira traded at 157.90 to the dollar on the interbank market, weaker than the 157.70 to the dollar on Tuesday.
Traders said greenback flows from units of Royal Dutch Shell , France Total and Agip of about $196 million to the market in the week was not enough to counter demand.
"The level of dollar inflows into the market from oil companies this week were not enough to match strong demand from fuel importers, and this caused the naira to depreciate," one dealer said.
Traders said the naira is seen trading flat or strengthening a little in the coming days because of expectations that flows from offshore investors participating in the bond and treasury bill auctions could provide some support for the local currency.
"We don't see the naira depreciating to the 158 level in the near term because of offshore inflows and expected dollar sales by the NNPC (state-owned energy company) next week," another dealer said.
At the bi-weekly official forex window, the central bank sold $150 million at 156.01 to the dollar, compared with the $128 million sold at 156.06 to the dollar at Monday's auction.