Naira strengthens to N159.50 against dollar
The naira strengthened to a five-week high against the United States dollar at the inter-bank market on Wednesday, as oil companies increased their dollar supply.
The naira closed at N159.50 to the dollar, its strongest against the greenback since January 4, compared with N160.30 it closed at on Tuesday.
Traders said the local unit of Exxon Mobil, Niger Delta Development Commission and the Nigerian National Petroleum Corporation sold around $500m towards the end of last week to some banks, while France’s Total and Italy’s AGIP sold a combined $88.8m on Wednesday.
Reuters quoted a dealer as saying, “The market is swimming in dollars as a result of inflows from energy companies and most banks are not taking positions and this has helped the naira to appreciate. The naira has strengthened at the inter-bank, moving close to the Central Bank of Nigeria’s prevailing rate.”
Meanwhile, the CBN sold $450m at N156.50 to the dollar at the bi-weekly foreign exchange auction, compared with $250m sold at N156.85 to a dollar at the previous auction.
Dealers said the local currency should remain stable for the rest of the week because of the high level of dollar liquidity in the market, but could ease a little from next week as demand increases. Another dealer was quoted as saying, “The exchange rate at the inter-bank is almost at par with the official window and this has made the dollar attractive to buy for some importers. We expect to see increase in demand for dollar, while the naira should depreciate marginally.”Traders added that the naira could trade within a band of N159.20 to N160.50 in the near term.
The naira strengthened against the dollar at the inter-bank market last week after the NNPC sold about $150m to some banks, boosting dollar liquidity in the market.The naira closed at N160.30 to the dollar last Thursday, after it opened the day at N161.10, compared to N161.15 it closed on Wednesday.
Dealers said the market dollar liquidity was increased by the sales of about $150m by the NNPC and $50m by a unit of Exxon Mobil, providing support for the naira. In recent weeks, sustained dollar sales by some energy multinationals, including the NNPC, have boosted dollar supply at the inter-bank and help strengthened the value of the local currency.
Currency traders added that the effect of the large dollar inflows into the market would continue to ensure that the naira traded around N160 and N160.80 in the coming days.
