The Naira was flat against the U.S dollar on the interbank market and firmed marginally at the bi-weekly auction Central Bank of Nigeria (CBN) on Monday.
Traders are expecting the currency to further build on recent gains later this week.
Naira traded at N160.90 to the dollar in thin trade that saw some lenders selling dollars at the interbank.
“The market was quiet today with demand for the dollar dropping off from what we are used to seeing,” one dealer said.
Naira firmed 1.2 percent last week, after a surge of inflows from foreign investors positioning to buy treasury bills and the CBN’s dollar sales to banks.
According to traders an additional $200 million sold by AMCON to some lenders from its debt recovery efforts also provided support for the local currency.
“The outlook favours the Naira gaining in the near term because of the gradual returns of offshore investors to the local debt market and possible dollar sales by some oil companies this week,” another dealer said.
Most offshore investors scaled down their investment in treasury bills and bonds two months ago on fears of rising inflation and the debt crisis in the Euro zone, which raised demand for the dollar and caused the naira to fall.
At the bi-weekly foreign exchange auction, the CBN sold $163 million at N155.87 to the dollar, short of the initial $200 million it offered and compared with $251 million sold at N155.90 to the dollar last Wednesday.