Naira Closes Flat At Inter Bank Market

Nigeria’s naira closed flat against the U.S dollar on the interbank market on Wednesday as dollar sales by state-owned oil firm NNPC to banks helped to reverse an earlier weakening of the local currency.

The naira closed flat at 156.50 to the dollar on the interbank and also flat at the official window at 155.77 to the dollar. It had traded at 156.80 to the dollar intraday before the NNPC announced the result of its dollar sales, traders said.

Traders said NNPC sold about $500 million to some lenders on Wednesday, prompting increased dollar demand from importers taking advantage of the cheaper dollar at the interbank.

“The naira is presently effectively cheaper at the interbank … many importers shunned the official window for the interbank to meet their demand,” one trader said.

The central bank charges importers one percent transaction commission on every dollar purchase at its twice-weekly auction.

On the official forex auction, the central bank sold only $43 million at 155.77 to the dollar, short of the $100 million it initially offered and compared with $300 million sold on Monday at the same rate.

Dealers said demand for the dollar has been building up gradually since the start of the year as more companies resumed fully for business, but dollar flows from offshore investors buying local debt and additional sales by the NNPC help provide support for the local currency.

“We see the naira trading below the 157 range for the rest of the week because of the prevailing dollar liquidity, but it could weaken if strong demand for the dollar persist,” another dealer said.

The naira strengthened 1.82 percent last year to close at 156.20 to the dollar, supported by offshore investors buying local debt and oil firms selling forex to meet local payments.