The nation’s currency, the naira, yesterday, weakened against the US dollar at the inter-bank market in spite of the intervention of the Central Bank of Nigeria’s (CBN) dollar supply of $355.4 million.
Dealers attributed the naira depreciation to increased demand of the greenback by the end users amid short supply from oil companies.
The CBN yesterday offered a total of $400 miltions lion but sold a total of $355.4 million to 20 deposit money banks at the rate of N155.73/$ at its bi-weekly Retail Dutch Auction System (RDAS).
Consequently, naira yesterday closed at N161.65/$ compared to N161.25/$ traded at the inter-bank market on Friday last week.
Analysts had anticipated some pressure on naira on the back of increased pressure on the external reserves due to dollar demand by importers in the absence of inflows from oil companies.
“The market is experiencing a dearth of dollar supply, while demand has risen in the last week,” one of the dealers told Reuters.
According to the dealers there is expectation of dollar inflows from offshore investors participating in a debt auction this week, which could help boost the naira.
Inter-bank rates at the money market yesterday dropped across tenor buckets by 1.03 percent, except over night tenor that rose to 10.63 percent from 10.62 percent on Friday last week.
The Nigerian InterBank Offered Rates (NIBOR) dropped from 12.60 percent last week Friday to 12.47 percent. Consequently, 1-month tenor, 3-month tenor and 6-month tenor all dropped from 12.48 percent, 13.22 percent and 14.06 percent last week to 12.25 percent, 13.00 percent, 14.00 percent, respectively.
Analysts had said inter-bank rates were expected to increase due to withdrawals to participate in the monthly Federal Government bond auction as well as bi-weekly official dollar sales.
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