Naira firmed against the U.S dollar on the interbank foreign exchange market on Wednesday, supported by large dollar sales by units of two energy multinational companies and a slowdown in demand.
It closed at N162.55 to the dollar on the interbank market, slightly higher than the N162.70 to the dollar it closed at the previous day.
“The dollars sold by Shell (unit of Royal Dutch Shell) and (France) Total on Tuesday hit the market today, helping to provide the needed support for the naira,” one dealer said.
Traders said while Shell sold an undisclosed amount of dollars, Total sold about $92 million, which raised the level of dollar liquidity in the market and boosted the naira value.
At the bi-weekly auction, the Central Bank of Nigeria (CBN) sold $350 million at N155.94 to the dollar, compared with $350 million sold at N155.91 to the dollar on Monday.
Traders said the market is long on dollars and the exchange rate could hover around the present level for the rest of the week.
“Most offshore investors have taken the bulk of their funds out and this has slowed down demand pressure, while we are expecting more oil companies to sell dollars in the coming days as part of their month-end sales cycle,” another dealer said.
The Naira has been on a downward trend in recent weeks, despite CBN interventions to prop it up, driven initially by dollar demand from fuel importers and later by an exodus of foreign investors out of bonds repatriating their returns.