Naira firms at 161.10 against US dollar

The Nigerian naira firmed on the interbank market on Monday as dollar flows from two energy companies and banks increased liquidity and supported the local currency.

The naira closed at 161.10 to the dollar, firmer than its 161.25 close on Friday.

Traders said a unit of Addax Petroleum sold $10 million and Agip sold about $3 million to lenders. Some banks that bought dollars from state-owned energy company NNPC last week sold a portion of their holdings in the market on Monday.

“The market is comfortable with the level of dollar liquidity, that was the reason the naira is trading at this level today,” one dealer said.

The naira rose to 160.10 to the dollar on the interbank market last Monday after NNPC sold around $400 million, but fell in the week as demand squeezed out part of the supplies. But traders expected the naira to strengthen this week.

“We see the naira appreciating further in the near term because we are gradually entering the month-end cycle and expect more dollar inflows from oil companies and offshore investors buying local debt,” another dealer said.

On the bi-weekly auction, the central bank sold $300 million at 155.89 to the dollar, compared with $430 million sold at 155.87 to the dollar last Wednesday.