Nigeria naira eases on dollar demand, liquidity

11 February 2013 – The Nigerian naira eased against the U.S. dollar on the interbank market on Monday, reflecting strong demand for the greenback from importers, traders said.

The naira closed at 157.40 to the dollar, weaker than Friday’s close of 157.30 naira.

At a foreign exchange auction on Monday, the central bank sold $180 million at 155.74 naira to the dollar, the same rate at which it sold $112.82 million at last Wednesday’s auction.

Dealers said dollar supply had dried up despite state-owned energy company NNPC’s sale of $350 million to some lenders last week, putting pressure on the local currency.

“We expect the naira to depreciate further in the week because demand for the dollar remains strong and dollar supply is weak,” one dealer said.

The currency of Africa’s top energy producer has traded steadily between 157-157.50 in the past two weeks on dollar flows from NNPC, multinational oil companies and offshore investors buying local debt.

But dealers say the naira could weaken to 157.70 against the dollar by the end of the week unless offshore investors participating in a bond auction on Wednesday inject hard currency into the market.
*Oludare Mayowa; Editing by Chijioke Ohuocha & Catherine Evans – Reuters.

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