The Nigerian naira eased against the U.S. dollar on the interbank and the bi-weekly foreign exchange auction on Wednesday as strong demand for the greenback from importers exerted pressure on the local currency.

The naira closed at 160.90 to the dollar on the interbank market, compared with Tuesday’s close of 160.80 naira.

Dealers said the market had adjusted to the reduction in the net open position for lenders announced last week by the central bank.

The bank last week raised the cash reserve requirement for lenders in Africa’s second-biggest economy to 12 percent from 8 percent and reduced net open foreign exchange positions to 1 percent from 3 percent to support the naira.

“There is significant demand in the market … (but) dollar inflows from oil companies and offshore interest in local debt have kept the naira in bound, otherwise it would weaken further,” one dealer said.

Dealers said the local unit of Chevron sold $24 million to some lenders on Wednesday, which was not enough to support the currency.

Dealers said most importers had brought forward their obligations to take advantage of the initial appreciation in the naira due to the central bank’s policy measures meant to strengthen the currency, thereby adding to dollar demand.

“We see the naira crossing the 161 mark to the dollar level in the coming days if NNPC (state-owned energy company) does not come to the market soon,” another dealer said.

NNPC is a major supplier of hard currency in the interbank market and the state energy firm sells currency to the market twice monthly.

On the central bank forex auction, $250 million was sold at 155.86 per dollar, compared with $200 million sold at 155.84 to the dollar. It did not disclose the amount of dollar demand at the auction.

Source: Reuters