The naira weakened marginally against the United States dollar on the inter-bank market on Monday in a thin trade, as market dollar liquidity was sufficient to counter dollar demand from importers, traders said.

Reuters reported that the naira closed at N157.30 to the dollar on the inter-bank market on Monday, compared with N157.25 to the dollar on Friday.

Traders said the market remained liquid enough from the dollar sales by the state-owned NNPC, easing pressure on the local currency.

A poll of 10 analysts by Reuters on Monday showed the naira should hold steady in the short term, buoyed by higher oil prices and a tight monetary policy, but gains could be hampered by rising inflation in the second half of the year.

Dealers said the market was fairly stable because of dollar liquidity in the system from last week’s Nigerian National Petroleum Corporation dollar sales, which quenched moderate demand from importers.

The naira rose to a six week high last week on dollar liquidity flow from the NNPC and some other energy companies.

The NNPC sold about $800m in two tranches to some lenders, while units of Chevron sold $65m and Royal Dutch Shell sold an unspecified amount.

“We see the naira remaining fairly stable for the rest of the week as we approach the month-end cycle and a possible increase in dollar flows from oil companies,” another dealer said.

Most oil multinational oil companies operating in Africa’s top energy producer sell dollars to banks on a month-end cycle to obtain naira for their local obligations.

On the bi-weekly foreign exchange auction, the central bank sold $120m at N155.75 to the dollar, the same amount and rate at the previous auction on Wednesday.

Source: Punch