Fx Naira/USD: Naira weakens on short dollar supply

The Nigerian naira fell against the U.S dollar on the interbank market on Wednesday, as expected month-end dollar flows from oil companies failed to materialise, creating a dollar shortage in the market, traders said.

The naira closed at 159.95 to the dollar, weaker than the 158.95 it closed at on Monday.

Traders said there was sustained strong demand for the dollar from importers. With only $2 million sold by a unit of Addax Petroleum, the local currency came under pressure.

“We had expected to see the central bank selling dollars directly today in the market to provide support for the naira, but that also did not come, while the $2 million sold by Addax petroleum (could not) absorb the demand in the market,” one dealer said.

Dealers said central bank had sold about $100 million to some lenders on Monday, outside its bi-weekly forex auction, in a move to support the naira and help calm the market.

Traders said the direct intervention by the central bank was meant to sustain the naira within its +/- 3.0 percent around 155 naira to the dollar band.

“The naira should strengthen a little in the week if more oil companies come to the market to fulfil their month-end obligations and the central bank sell dollar directly in the market,” another dealer said.

Oil companies operating in Africa’s top energy producer sell dollars to some lenders on monthly cycle to obtain naira to meet their local obligations.

The central bank sold $250 million at 155.75 to the dollar on the bi-weekly forex auction on Wednesday, the same volume and price it sold at Monday’s auction.