The Nigerian naira strengthened against the U.S dollar on the interbank market on Wednesday and held steady in the official market as inflows from some energy firms buoyed dollar liquidity.
The naira closed at 157.20 to the dollar at the interbank, firmer than the 159.85 Tuesday closed, supported by dollar inflows from two energy firms.
Dealers said a unit of Exxon Mobil sold $57 million to some lenders and the Nigerian Liquefied Natural Gas company about $15 million, helping boost liquidity and supporting the naira.
At the official window, the central bank sold $250 million at 149.95 to the dollar, marginally short of the 266.69 million demanded at the auction. The regulator sold all the $296.91 million demanded at its biweekly forex auction on Monday at 149.95 naira to the dollar.
Demand for dollars at the auction has fallen by around half since measures taken by the central bank last week to reduce speculators from participating at the official window.
“The market remains volatile because of the restrictive Net Open Position Limit, which is affecting the ability of banks to hold much dollars in reserves for their customers,” one dealer said.
Traders said the naira should strengthen further in the week if more oil companies sell dollars, but could weaken if demand increases and dries up the supply of dollars in the market.
The naira fell to an all-time low last week before the central bank introduced several measures to tighten naira liquidity and release dollar supply, while also selling foreign exchange aggressively at auctions and directly into the market.
Source: Reuters (Reporting by Oludare Mayowa)