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Naira falls on importer dollar demand

By on August 8, 2014

The naira fell by 0.43 per cent against the dollar on the interbank market on Wednesday after importers brought forward their obligations to take advantage of a recent rally in the local currency.

According to Reuters, the naira closed at N161.65 naira to the dollar, weaker than the N160.95 that it closed the previous day.

The naira had on Monday firmed to an almost three-month high against the greenback.

Traders said the local unit of Eni sold $20m to some lenders on Wednesday, but it was not sufficient to support the naira.

“There was a lot of demand in the market today … from importers buying dollars,” one dealer said.

Dealers anticipate a dollar sale by the Nigerian National Petroleum Corporation any time soon to help to stem the slide in the local currency. The NNPC supplies a substantial amount of the dollar flows in the country.

The naira had strengthened against the dollar on the interbank market on Monday, reaching its strongest in almost three months, as a unit of Royal Dutch Shell sold dollars and demand for hard currencies weakened.

The naira closed at N160.90 to the dollar on Monday, up 0.36 per cent over Friday’s close of N161.48 to the dollar.

The last time the naira was that strong was May 5, when it closed at N158.75 to the dollar.

Most of the energy companies operating in the country buy the local currency at the end of the month to fund domestic obligations.

The naira had closed unchanged against the dollar on the interbank market last Wednesday, after two days public holiday to mark the Muslim festival.

Month-end dollar sales by some energy companies have continued to provide support for the local currency in the last two weeks, keeping it within the band of N161.50-N162 against the dollar.

“We see the naira stable around the present band in the near term, with more dollars expected from some energy companies,” one dealer had said

 

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