Naira Strengthens on Slower Dollar Demand, Month-End Sales
The naira gained as oil companies began month-end dollar sales to fund local operations and after weak demand for the U.S. currency in central bank auctions.
The currency of Africa’s biggest oil producer appreciated 0.2 percent to 157.5 per dollar as of 5:39 p.m. in Lagos, the commercial capital.
“The naira is expected to appreciate this week, particularly on the interbank market, as oil firms sell U.S. dollars as part of their month-end processes,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Africa analysts at Rand Merchant Bank in Johannesburg, wrote in an e-mailed note today. “Dollar demand at the twice-weekly foreign currency auctions was rather subdued last week, falling well short of the amount offered by the central bank.”
The Central Bank of Nigeria offers dollars at auctions on Mondays and Wednesdays and through interbank trading to maintain exchange-rate stability. The oil industry is the second major source of dollar supply in the country.
Nigeria sold $138.7 million at a foreign-currency auction today, less than $150 million it put on offer, the Abuja-based Central Bank of Nigeria said in an e-mailed statement. The marginal rate, which is also used as the prevailing exchange rate, was 155.90 naira, unchanged from the previous offering on Feb. 22, it said.
Fuel imports have been a large source of pressure on Nigeria’s foreign-currency market and demand for foreign currency to fund fuel imports has eased, central bank Deputy Governor Tunde Lemo told a committee probing oil subsidy payments on Feb. 7.
Ghana’s cedi strengthened for the second day by 0.3 percent to 1.6996 per dollar, as of 4:41 p.m. in Accra, the nation’s capital.
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