The Nigeria’s naira strengthened marginally against the U.S dollar on the interbank market on Monday, but weakened at the official window as strong demand for the greenback built up at the bi-weekly foreign exchange auction, traders said.

The naira closed at 157.90 to the dollar on the interbank, firmer than the 158.05 a dollar it closed at on Friday.

Traders said the naira was driven up by surplus dollar liquidity from the previous week, partly helped by about $10 million sales by a unit of Addax Petroleum, which is owned by China’s Sinopec Group < 0386.HK >.

At the bi-weekly forex auction, the central bank sold $150 million at 156.01 to the dollar compared with $150 million sold at 155.90 to the dollar last auction on Wednesday.

Traders said dollar inflows from oil companies are gradually thinning out, so the naira could ease above the 158 naira to the dollar mark in the coming days.

“There was a noticeable build up in dollar demand at both the interbank and central bank’s window, and this could start eroding the gains in the last three weeks,” one dealer said.

However, traders also said some oil multinational companies are expected to sell dollars soon, while offshore inflows to the treasury bill auction later in the week could provide some support to the naira.

Another dealer expected the naira to trend within the 157.60-158.20 band in the near term if more oil companies sell dollars.

Source: Reuters/Reporting by Oludare Mayowa