Naira weakens at inter-bank market, CBN auction

The naira weakened against the United States dollar on both the inter-bank market and at the Central Bank of Nigerias window as demand for the greenback continue to outweigh supply.The naira currency eased to N160.20 to the dollar at the inter-bank, compared to N159.65 a dollar close on Friday.Traders said the local currency eased to N160.60 to the dollar intraday after results of the bi-weekly auction showed a supply gap, but later firmed as the CBN sold dollars directly to some lenders to curtail pressure on the naira.On the official window, the CBN sold only $200m at N157.26 to the dollar, short of the $315.63m demanded. The regulator sold $250m at N156.21 to the dollar at the previous auction on Wednesday.The CBN moved its target trading band for the naira last week to plus or minus three per cent around N155, from plus or minus N150 due to prolonged naira weakness and high dollar demand.Reuters quoted a dealer as saying, "There is still strong demand in the market and unless the CBN continues to intervene by selling dollars directly to the market, the naira will continue to be under pressure."Traders said the CBN came to the market shortly before the close of business with unspecified amount of dollars, sold to some lenders, which helped to calm the market.Another CBNs dealer said, "It all depends on willingness to support the market with regular intervention, otherwise the naira will continue to weaken."Inter-bank lending rates eased last week to an average of 14.83 per cent from 15.50 per cent recorded the previous week after a portion of public sector wages hit the system and helped boost liquidity.Traders said about N95bn was released on Friday, helping to ease liquidity pressure.The secured Open Buy Back remained unchanged at 14 per cent, representing 200 basis points above the CBNs 12 per cent benchmark rate and 400 basis points above the Standing Deposit Facility rate. Overnight placement eased to 15 per cent from 16 per cent, while call money closed at 15.50 per cent lower than the 16.50 per cent it closed at last week.Indicative rates for the Nigeria Inter-Bank Offered Rate closed lower, reflecting the sentiment in the market, with the seven day funds falling to 16.75 per cent from 17.25 per cent the previous week.
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