The naira weakened against the United States dollar on the inter-bank market on Monday, as strong dollar demand for the local currency from fuel importers held down the local unit.

The naira closed at the inter-bank market at N157.95 to the dollar, weaker than the N157.75 on Friday.

Traders said some fuel importers were issued fresh import licences, boosting dollar demand.

This was combined with insufficient dollar supply from oil companies that were pilling pressure on the local currency.

Reuters quoted a dealer as saying, “Some oil importers have been issued fresh round of licences to import fuel, while outflows to dividend payments by some companies are increasing demand for the dollar and putting pressure on the naira.”

Dealers said that although the Nigerian National Petroleum Corporation sold about $500m to some lenders last week, the impact of the dollar sales on the naira was subdued because the company sold at a rate close to the prevailing market price, leaving too small a margin for lenders.

Another dealer was quoted as saying, “We see rate crossing the N158 to the dollar mark by tomorrow (Tuesday), unless there is significant dollar flow from multinational oil companies to counter demand.”

Meanwhile, at the official window, the Central Bank of Nigeria sold $150m at N155.70 to the dollar, compared with $150m sold at N155.75 to the dollar at last Wednesday’s auction.

Inter-bank lending rates climbed last week to an average of 14.16 per cent, from 13.91 per cent the previous week, as the CBN aggressively mopped up excess liquidity by selling treasury bills.

Source: Punch/Ademola Alawiye