Naira eases as banks cover short dollar position

The naira eased against the U.S. dollar on Wednesday as banks bought the greenback on the interbank market due to inadequate supply from offshore investors participating at a bond auction, dealers said.

Amid strong dollar demand against disappointing dollar flow from offshore investors buying local debt, dealers said.

The local unit closed at 162.70 naira to the dollar, 0.12 percent weaker than 162.50 naira it closed the previous day.

Dealers said some banks sold down their positions in anticipation of dollar flow from offshore funds buying treasury bills on Wednesday, which materialised in trickles.

“Demand for the dollar was strong against limited supply, especially from offshore investors at the auction,” one dealer said.

Nigeria offered N137.97 billion ($848.99 million) worth in treasury bills of 3-month and one year tenor at an auction on Wednesday, but offshore participation was not as significant as it had been in previous auctions, dealers said.

Dealers are expecting the state-owned oil company NNPC to sell part of its month-end dollar in the coming days to help provide liqudity and possibly strengthen the local currency.

Reuters