The naira fell 0.5 per cent on Wednesday after an oil company sold dollars to some lenders on the interbank market below the Central Bank of Nigeria‘s (CBN) clearing rate, dealers said.
The currency closed at N202.10 on the interbank market, weaker than Tuesday’s close of 201.10 naira to the dollar, dealers said.
The unit traded at 221 naira against the greenback at the parallel market, operated by bureau de change agents.
The local unit of French oil company Total asked lenders to bid for $107 million, which it auctioned within a range of 201.90 to 204 naira to the dollar, dealers said.
Three sales were carried out on Wednesday at 198 naira for a total of $23.76 million, just before the interbank market closed, Thomson Reuters data showed, with dealers attributing trades to a central bank dollar sale.
Read also: The impact of CBN’s RDAs elimination on the economy
The central bank last week scrapped its bi-weekly currency auctions and a market body said it would sell dollars only at 198 naira, a move that amounts to a de facto devaluation of the currency of Africa’s biggest economy.
Dealers said the central bank was not selling dollars to fill dollar demand is described as “ineligible orders”, including payment for credit cards, leaving lenders to source for hard currency elsewhere.
After the forex auctions were scrapped, FMDQ, a group comprising Nigeria’s main lenders and the central bank, said dealers will only be able to buy dollars from the central bank if they have a prior order from a corporate customer, to curb speculation.
The naira crashed through a psychologically important level of 200 to the dollar this month in a rout triggered by weak oil prices and escalating tension over the postponement of a presidential election in Africa’s top oil producer, prompting the central bank to scrap its bi-weekly forex auctions.
