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Nigerian naira eases on strong dollar demand

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Wednesday November 23, 2011 2:59pm 

The Nigerian naira eased against the U.S. dollar on both the interbank market and at a bi-weekly auction on Wednesday as the central bank again failed to meet demand for the greenback.

The naira closed at 159.75 to the dollar on the interbank market compared with Tuesday's close of 158.90 after the central bank failed to meet demand at its official window, putting pressure on the local currency.

At the official window, the central bank sold only $250 million at 156.21 naira to the dollar, short of the $411.62 million demanded. It sold $250 million at 155.21 naira at the previous auction on Monday.

"The naira eased because the central bank didn't meet demand," one currency dealer said, adding that the market had expected the bank to intervene to stem the decline, which didn't happen.

"If they (central bank) don't intervene tomorrow then rates will reach 160." he said.

Dealers said some oil firms sold a total of $120 million to some lenders as part of their month-end foreign exchange sales, which wasn't enough to fill the dollar demand gap.

The central bank moved it target trading band for the naira on Monday to 150-160 from 145-155 previously due to prolonged weakness of the local currency and high dollar demand.

Dealers said market trading had priced in the policy move ahead of the announcement and was now looking to the bank to keep the naira within the new trading band.  


Source: Reuters (Reporting by Chijioke Ohuocha)


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