Naira falls as CBN closes forex window

The naira fell against the United States dollar on Wednesday, to its weakest since October 10, as the Central Bank of Nigeria closed its official foreign exchange window for the year, putting pressure on the inter-bank market dollar supplies.The naira currency eased to N163.30 to the dollar at the inter-bank market, its weakest in 10 weeks, from N162.35 the previous day.Reuters quoted a dealer as saying, There is some demand in the market and the reality of the CBN closure of the official window for the year must have spurred some customers to buy dollars to edge against possible further depreciation in the coming days.On the last bi-weekly forex auction for the year, the CBN sold $200m at N156.70 to the dollar, a sum and rate it had maintained since last month. Demand at the auction was slightly higher at $218.08m.Traders said most forex end-users were of the view that the naira could depreciate further next year because of the recent shift in the CBNs trading band for the naira from plus or minus three per cent around 150 to plus or minus three per cent around N155 to the dollar.Another trader was quoted as saying, People are anticipating further depreciation of the naira next year and they are trying to bring forward their obligations in the hope that they can reduce the impact of future depreciation on their business.Traders pointed out that two local units of Chevron and Addax sold $10.50m and $2m respectively to some banks, but it was not sufficient to calm the market.The naira is likely to continue to depreciate against the dollar in the near term as end-users scramble to cover their position and edge against future depreciation.Meanwhile, the naira weakened against the United States dollar on Monday as demand for foreign exchange remained unabated as the sales of $350m by the Nigerian National Petroleum Corporation to some banks on Friday failed to strengthen the market further.The currency had closed at N162.30 to the dollar at the inter-bank market, weaker than the N161.70 to the dollar on Friday.Traders had said the unexpected sales of $350m by NNPC on Friday to some banks helped to provide immediate support for the local currency but strong demand for the dollar had taken out the foreign exchange supply and pushed the naira back to its weak position.
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