Nigeria: Naira Firms At Interbank On Forex Sales

Leadership (Abuja)

Blessing Anaro

5 January 2012

The naira firmed against the dollar at the interbank market yesterday, owing to $153.04 million sales by local units of multinational oil companies to selected banks, dealers said.

The local unit closed at N159.55 to the dollar on the interbank yesterday, up from Tuesday’s close of N160.20. It had touched an intra-day low of N163.05 on Tuesday.

Dealers said Chevron sold $105 million, ExxonMobil sold $24.04 million, while Total sold $24 million to banks, increasing the dollar supply to the interbank market, which helped support the local currency.

At the official window, the Central Bank of Nigeria (CBN) sold $300 million at N156.71 to the dollar, its first auction of the year. The central bank however did not disclose the level of demand as it normally does.

It auctioned $200 million at N156.70 on December 21, its last auction in 2011, on $218 million demand.

“I see they are trying to improve liquidity. In the past five auctions, they sold only $200 million. But now they didn’t give us the demand figure, it’s very difficult to analyse what CBN intends to do,” one currency trader told Reuters.

“Assuming they didn’t meet demand at the auction, then that will send the wrong signal to the market,” he said.

The naira lost 4.46 per cent of its value in 2011, owing to prolonged currency weakness and strong dollar demand that also prompted the central bank to move its target trading band for the unit in November 28 to the N150 to160 range, from N145 to 155 target in budget 2011.

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