Naira drops marginally despite oil firms’ dollar sales

28 October 2014, Lagos – The naira weakened marginally by 0.15 per cent against the dollar on the interbank market yesterday on renewed surge in dollar demand, despite about $112 million in sales by an oil company.

A unit of French oil major Total sold about $112 million to some lenders yesterday but was insufficient to support the naira, according to Reuters.

Financial markets 1The local currency fell to N165 to a dollar compared with the N164.74 to a dollar it closed at on Friday, due to increased dollar demand from importers and corporations stocking up for year-end sales.

The naira had recovered from a 7-month low last week, as the central bank took steps to prop it up.
The local currency has come under pressure in the last five weeks owing to concerns over falling global oil prices, which led to offshore investors cutting back their positions in the local debt market and repatriating their funds.

“We are expecting more oil companies to sell dollars in the market this week and a direct intervention by the central bank, which could keep the currency within range in the short term,” one dealer said.

Deputy Governor of the Central Bank of Nigeria, Dr. Sarah Alade last week assured Nigerians that the central bank “will continue to defend the naira.”

Since mid-September, the central bank has used the reserves of Africa’s top oil producer and biggest economy to sell dollars outside of regular auctions held Mondays and Wednesdays, according to Standard Chartered Plc.  According to Alade, the apex bank would keep using the auctions and direct dollar sales to banks to preserve the value of the currency.




– This Day

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