The naira strengthened against the United States dollar at the inter-bank market on Wednesday, supported by dollar sales by local unit of Royal Dutch Shell and Nigerian Liquefied Natural Gas company to some banks.

The local currency closed at N161.55 to the dollar, stronger than N162.70 to the dollar at Tuesday’s close.

Traders said Shell sold around $100m, while NLNG sold $15m to some banks, boosting dollar liquidity in the market and providing support for the naira.

On the official window, the Central Bank of Nigeria sold $250m at N156.85 to the dollar, compared with $198.12m sold at N156.70 to the dollar on Monday. The CBN, however, did not disclose the amount of dollar demanded at its bi-weekly auction.

Reuters quoted a trader as saying, “The CBN continues to advise banks on the level of bids they should bring to the auction. I think the essence is to reduce pressure on the auction and give the impression that demand has been subdued.”

Dealers said the inflows from the oil companies and speculation that the Nigerian National Petroleum Corporation planned to sell dollars to some banks this week should keep the market liquid and continue to provide support for the local currency.

Another trader was quoted as saying, “We don’t see the naira depreciating in the near term because of the expected dollar sales by the NNPC and other oil companies.”

The inter-bank forex market remained shut last week as a result of the strike called by the Nigeria Labour Union and Trade Union Congress to protest the removal of fuel subsidy.

Source: Punch/Ademola Alawiye with Agency Reports