Naira drops to weakest level in nine weeks

The naira eased against the United States dollar to its weakest level in nine weeks as robust demand for the greenback from some end-users stocking up for Christmas sales and those excluded from the official window overstretched supply.The local currency traded at N162.45 to the dollar at the inter-bank market, weaker than N161.70 to the dollar compared to Wednesdays close.At the official window on Wednesday, the CBN sold only $200m at N156.70 to the dollar, short of the $245m demanded but in line with the $200m sold at N156.50 per dollar on Monday.Traders said the low demand at the auction was not a true reflection of real demand for foreign exchange in the market as CBN officials continued to advise banks on the amount of dollars to be demanded and rates to reduce pressure on the bi-weekly auction.Reuters quoted a dealer as saying, Dollar inflow has thinned out in the market, while a number of people are covering their short positions, putting pressure on the available dollars.Another trader was quoted as saying, The local unit of Chevron oil is selling about $35m to some banks later in the day, while fellow oil company Agip is also selling $27m, but that may not be sufficient to reduce pressure in the market. There is strong demand in the market and as long as the CBN fails to meet this demand, the naira will continue to depreciate in the near term.
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