The Nigerian naira weakened against the U.S dollar on the inter-bank market on Monday as strong demand for the greenback from bureaux de change operators put pressure on the local currency, traders said. The local currency closed at 155.45 to the dollar on the interbank market compared to 155.20 per dollar on Friday.
Some banks declined to sell dollars bought from the state-owned energy firm NNPC, which would have helped ease pressure on the naira. NNPC sold about $400 million to some lenders on Thursday, boosting liquidity and providing some support for the naira which had earlier on Wednesday fell to its 11-month low. “(Banks) that have the NNPC funds are not selling and this has reduced the available dollars in the market and is putting pressure on the naira,” one dealer said.
Traders said they expected that some of the banks who have NNPC funds would sell before Wednesday but the naira would continue to weaken if not enough liquidity came into the market. On the official window, the central bank sold $350 million at 153.27 to the dollar, slightly lower than the $362.74 million demanded and $400 million sold at 153.16 to the dollar at Wednesday’s auction.
“There is a lot of demand from the bureaux de change in the market and unless there are more dollar inflows, the naira will continue to be under pressure,” another dealer said. Traders said most of the energy firms that usually sell dollars on a month-end cycle have finished their sales and this could reduce support for the local currency.
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