By Agency Reporter

The naira weakened further against the United States dollar on the interbank market on Wednesday as strong demand for the greenback persisted in the face of static supply, traders said.

The naira closed at N153.80 to the dollar against N153.54 on the previous day as the Central Bank of Nigeria failed to meet all the dollar demand at its bi-weekly auction. At the official window, it sold $250m at N150.71, compared to $342.34m demanded. On Monday, it sold $250m at N150.56.

Traders, according to Reuters, said dollar sales by units of Royal Dutch Shell and Exxon Mobil were not sufficient to satisfy the market on Wednesday.

“Ideally, we expect the naira to appreciate this week as a result of dollar sales by most energy companies, but it seems strong demand has weakened the impact of the inflows,” one dealer said.

Most oil companies operating in Nigeria sell dollars around the end of every month to obtain naira for local obligations; dealers estimated such inflows since last week, which have included dollar sales by the Nigerian National Petroleum Corporation, at about $500m.

But the inflows had not been enough to balance heavy dollar demand, which dealers and analysts said might have been partly due to a rise in imports of refined oil products, and an increase in their price.

The rise in international crude oil prices may not yet be benefiting Nigeria because it is locked into long-term contracts, while any additional dollars obtained from crude oil exports may not be remitted to the country immediately.

Source: Punch