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Nigerian naira gains vs dollar on oil firms forex sales

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Wednesday December 14, 2011 3:08pm

The Nigerian naira strengthened against the U.S dollar on the interbank market on Wednesday as about $216 million sold by three energy companies to some lenders provided support for the local currency.

The naira currency closed at 162.20 to the dollar on the interbank market, up from 162.40 on Tuesday.

Traders said though the central bank failed to meet all demand at its bi-weekly auction on Wednesday, dollar sales by local unit of France Total, Agip and Royal Dutch Shell totalling about $216 million and direct sales by the regulator to some lenders helped provided needed support in the market.

On the official window, the central bank sold $200 milion at 156.70 to the dollar, same figure and rate at the previous auction on Monday.

"The naira actually weakened to around 162.60 to the dollar intraday, but strengthened to 161.85 to the dollar after the inflows from the oil companies hit the market before closing at 162.20 due to strong demand," one dealer said.

Traders said demand remained strong in the market and could continue to keep the naira under pressure in the near term.

"We have a lot of demand from customers that have huge volume and could not get their bids through the central bank auction. These customers are forced to resort to the interbank to enable them meet their obligations," another dealer said.

Traders said the central bank official continue to advise banks on the amount of dollars to be demanded and rate quotes to reduce pressure on the bi-weekly auction.

The naira is expected to trade within the 161.90-162.60 band in the last days of the year as some oil companies sell dollars and the central bank sustain its direct dollar sales to some banks.


Source: Reuters (Reporting by Oludare Mayowa)

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