Naira gains grounds against the U.S dollar at the Interbank Market

Channels Television  
Updated March 16, 2012

The Nigerian naira strengthened against the U.S dollar on the interbank market on Friday, after dollar sales by state-funded development agency NDDC and inflows from offshore investors buying local debt boosted dollar liquidity.

The local currency closed at 157.60 to the dollar on the interbank, firmer than the 157.90 it closed at on Thursday.

Traders said about $200 million sales by the NDDC, a state development agency focused on the oil producing Niger Delta, and unspecified amount of offshore dollar inflows provided support for the local currency.

“Demand for the dollar has remained strong, but the inflows from NDDC and offshore investors absorbed it, while expectations of additional dollar sales by Mobil on Monday boosted outlook for the naira,” one dealer said.

The naira has been under pressure from increased demand for the dollar by gasoline importers who were granted permits last week to import fuel for the second quarter of the year.

Nigeria, Africa’s biggest crude exporter issued 42 marketesr with permits to import a total of 4.8 billion litres of gasoline in the second quarter this year, the first open tender announcement since subsidies were removed then partly reinstated in January.

Traders said bids for dollars to back the imports are already putting pressure on the local currency.

Dealers said the naira will continue to trade around the 158 naira to the dollar next week if dollar, provided dollar inflows continue to trickle in from oil companies.