Nigeria’s naira currency hit a three week high against the U.S. dollar on the interbank market on Monday, supported by low demand for hard currency and dollar inflows from foreign banks.

The naira closed at 157.05 to the dollar on the interbank, firmer than the 157.30, it closed at on the last trading day on Wednesday. The last time it was higher than Monday’s level, it closed at 156.45 to the dollar on October 4..

“The market was very liquid from dollar sales by some foreign banks and offshore investors buying local debt and this boosted support for the naira,” one dealer said.

Traders said weak demand for dollars at the official window also helped to strengthen the naira, as most banks were selling down their positions.

The central bank had initially offered to sell $100 million at the bi-weekly auction, but ended up selling $43.5 million at 155.76 to the dollar, compared with $142.96 million sold at 155.76 to the dollar at the last auction on Wednesday.

Traders said the naira could strengthen further in the near term if the state-owned energy firm NNPC and other oil multinational companies sell dollars this week, as expected.

NNPC supplies the bulk of foreign exchange sold on the interbank market.

Source: Reuters