Naira weakens on strong demand for dollars

Thenaira weakened against the United States dollar on both the inter-bank and Central Bank of Nigeria window on Monday as demand for the greenback outstripped supply at both markets.The local currency closed at N159.52 to the dollar on the inter-bank, weaker than the N156.40 a dollar on Fridays close.Currency traders said the CBN failed to clear all demand at its auction on Monday, while request from end-users excluded from the official window exerted more pressure on available currency at the inter-bank.The CBN recently banned petroleum dealers from sourcing dollars at its official window for imports and restricted the sales at its auctions to foreign firms taking the currency offshore because they could buy from the inter-bank.On the bi-weekly auction, the CBN sold only $200m at N150.25 to the dollar, short of the $242.34m demanded and the $345.12M sold at N150.05 to the dollar at last Wednesdays auction.Reuters quoted a dealer as saying, We have demands in the market because of those companies that were excluded from the bi-weekly auction, while the supply side remains weak. Naturally, if the CBN decides to sell dollar directly to some banks tomorrow (Tuesday), the naira will appreciate againTraders said local units of ExxonMobil and Total sold $50m each, but was not enough to provide support for the local currency.The naira has been fluctuating between N156 and N160 to the dollar in the last two weeks because of the regular direct sales of dollars to some banks by the CBN in its moves to provide stability in the forex markets.Dealers said the regulator sold unspecified amount of dollars to some banks on Friday, outside its regular auction, helping to provide support for the naira.But with demand on Monday, the naira again depreciated at the inter-bank market.Meanwhile, the CBN said it sold N110.11bn ($703.80m) in short-dated treasury bill at an auction on Thursday with yields on the papers rising for the second consecutive auction.The CBN sold N30bn in the 91-day treasury bills at a 15.29 per cent marginal rate, N48.73bn in the 182-day paper at 16.29 per cent and N31.38bn in the 364-day bills at 16.49 per cent.The regulator sold the 91-day bill at a 15 per cent marginal rate, 182-day paper at 16 per cent, and the 364-day bill at 16.22 per cent at its last auction on October 13.
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