By Agency Reporter

Tuesday, 8 Feb 2011

The naira eased on both the interbank and official markets on Monday as demand for the United States dollar outstripped supply, with traders expecting the local currency to weaken further in the week.

The naira fell to N152.71 to the dollar at the interbank market from N152.48 as most energy multinationals concluded their month-end dollar sales to banks.

On the official window, the Central Bank of Nigeria sold $200m at N150.34 to the dollar compared to the $225.8m sought at the auction, but higher than the $124m it sold at N150.31 per dollar last Wednesday.

“Dollar liquidity is gradually drying up in the market due to lack of flow from energy firms, and we have started seeing an increase in demand again,” one dealer said.

Traders said the naira could ease further in the week as dollar liquidity continues to thin out with a rebound in demand for the greenback.

Inter-bank interest rates remained well below the CBN’s benchmark last week as the budget allocations and a lack of significant outflows kept liquidity high.

The secured Open Buy Back remained unchanged at 2.25 per cent, below the CBN‘s six per cent benchmark rate. Overnight and call were stable at 2.5 per cent and three per cent respectively.

Source: Punch