• Friday, July 19, 2024
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BusinessDay

Naira holds firm against dollar after CBN tightens liquidity

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The naira held steady against the US dollar on the interbank market on Wednesday after the Central Bank of Nigeria (CBN) tightened liquidity to support the local currency.

The CBN kept interest rates on hold for the 15th time in a row on Tuesday but hiked its cash reserves requirement on private sector deposits by 300 basis points to 15 percent to tighten liquidity in the naira.

The naira closed at 164.90 to the dollar on the interbank market, the same level as its close the previous day.

The naira had weakened to 165.7 to the dollar a few hours before the central bank announcement on Tuesday but later reversed its losses when indications emerged that the bank did not plan to devalue the currency.

“The market was calmed today because of low volume of demand for the dollar and a renewed confidence the central bank was willing to continue to support the naira in the near term,” one dealer said.

Traders said the outlook favoured local currency gains in the near term as some oil companies start their month-end dollar sales and the market responds to the fresh tightening.

Reuters