Naira appreciates as Chevron, Agip sell $91m

Thenaira strengthened against the United States dollar at the inter-bank market on Monday after Chevron Nigeria Limited and Nigeria Agip Oil Company sold about $91m.The naira closed at N161.30 to the dollar at the inter-bank market from N161.40 Fridays close due to the inflows from two energy firms.Traders said local unit of Chevron sold about $66m to some banks, while Agip sold $25m which provided some dollar liquidity and support for the local currency.At the official window, the Central Bank of Nigeria sold $200m at N156.50 to the dollar, short of the $229.14m demanded and compared with $200m sold at N156.31 to the dollar at the previous auction on Wednesday.Traders said the CBN continued to indirectly control demand and the bid rate at its bi-weekly auction in a move to reduce pressure on the local currency and ensure stability around its trading band.Reutersquoted a dealer as saying, Officials of the CBN usually called around before the auction and asked banks to limit their dollar demand to a specific amount and also that they should not quote above a certain rate otherwise their bids will be disqualified.Another dealer was quoted as saying, The naira will depreciate further in the coming days because dollar supply is not coming as much again, while demand remains strong.The CBN last month moved its target trading band for the naira to plus or minus three per cent around N155, from plus or minus three per cent around N150 due to prolonged naira weakness and high dollar demand.Traders said if the CBN continued to sell dollars directly in the market, the naira could trend around N161 to N161.60 in the near term; otherwise, it would ease further.Inter-bank lending rates rose sharply last week to an average of 16.50 per cent, from 14.83 per cent in the previous week mainly on the delayed release of some N300bn of Octobers budget allocation.Currency traders said the market was also in deficit because the CBN aggressively drained the system of about N106.83bn last week.Traders said the Secured Open Buy Back climbed to 15 per cent from 14 per cent previously, representing 300 basis points above the Central Bank of Nigerias 12 per cent benchmark rate and 700 basis points above the Standing Deposit Facility rate.
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