Nigerian Naira Falls On Dollar Demand

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Nigeria’s naira currency fell to its lowest level in two
months against the U.S dollar on the interbank market on Wednesday, on strong
dollar demand from investors repatriating their dividends abroad, traders said.

The naira closed at 158.90 to the dollar on the interbank
market, the lowest since the middle of February, compared with the 158.03 naira
it closed at on Tuesday.

“The market was hit by large demand for the dollar with
which it could not cope with due to lack of dollar flow, putting pressure on
the naira,” one dealer said.

Dealers said several foreign investors are taking profit on
their investments, increasing pressure on the local currency.

The naira had traded around the 157.10-157.90 naira to the
dollar band for the better part of the last two months on the impact of dollar
sales by oil companies and offshore investors who are investing in Nigeria’s
short-dated debt notes.

“We see the naira depreciating further in the coming days
unless the central bank intervenes to calm the market,” another dealer said.

The local unit remains within the central bank’s 150-160
target band.

On the official window, the central bank raised its supply
to $200 million and sold at 155.70 to the dollar, compared with $150 million
sold at 155.70 to the dollar on Monday.