Naira firmed against the greenback on the interbank market on Wednesday, after dollar sales by the Central Bank of Nigeria (CBN) and two oil firms. The huge dollar sales boosted liquidity amid lackluster demand.
The Naira ended at N162.75 to the U.S. dollar on the interbank on Wednesday, firmer than the N163.16 it closed at on Tuesday.
Dealers said the local units of Chevron and Addax sold about $50.2 million combined to some lenders on Wednesday, lifting liquidity in a market with waning dollar demand.
At its auction, the CBN sold $251 million at N155.90 to the dollar on Wednesday, compared with $350 million auctioned at N155.94 on Monday.
It had initially offered $350 million at Wednesday’s sale, but only shifted $251 million due to insufficient demand, traders said.
The bank didn’t disclose the level of demand at its auction.
“We see the market hovering around the present level of N162.50-N163 naira in the coming days unless there is a resurgence in demand and slowdown in dollar sales by oil companies,” one dealer said.
The Naira has weakened from around N159 to the dollar since the beginning of the year to above N162, in the past two months, driven partly by an exit of offshore investors in the local debt market and demand by fuel importers.
The CBN has been providing support to prop up the Naira through direct intervention at the interbank market, which has been eating into the country’s reserves.
The nation’s foreign exchange reserves declined to $36.8 billion by July 3, compared with $37.64 billion a month earlier, the apex bank data showed on Wednesday.