Nigeria’s naira firmed against the greenback on the interbank market on Wednesday, after dollar sales by the central bank and two oil firms boosted liquidity amid lacklustre demand, traders said.

The naira ended at 162.75 to the U.S. dollar on the interbank on Wednesday, firmer than the 163.16 it closed at on Tuesday.

Dealers said the local units of Chevron and Addax sold about $50.2 million combined to some lenders on Wednesday, lifting liquidity in a market with waning dollar demand.

At its auction, the central bank sold $251 million at 155.90 naira to the dollar on Wednesday, compared with $350 million auctioned at 155.94 naira on Monday.

It had initially offered $350 million at Wednesday’s sale, but only shifted $251 million due to insufficient demand, traders said.

The bank didn’t disclose the level of demand at its auction.

“We see the market hovering around the present level of 162.50-163 naira in the coming days unless there is a resurgence in demand and slowdown in dollar sales by oil companies,” one dealer said.

The naira has weakened from around 159 to the dollar since the beginning of the year to above 162, in the past two months, driven partly by an exit of offshore investors in the local debt market and demand by fuel importers.

The central bank has been providing support to prop up the naira through direct intervention at the interbank market, which has been eating into the country’s reserves.

Nigeria’s foreign exchange reserves declined to $36.8 billion by July 3, compared with $37.64 billion a month earlier, central bank data showed on Wednesday.

Source: Reuters