Naira falls on increased dollar demand
Nigeria’s naira currency weakened against the dollar on the interbank market yesterday, with the dollar in demand as importers sought to meet their foreign exchange needs.
The local unit closed at 162.30 to the dollar, weaker than 161.75 Tuesday’s closed.
Traders said dollar supply from oil companies and offshore investors had dried up, leaving the market with less dollar liquidity in the face of increased demand from importers and others.
“There is no dollar inflow from oil companies while dollar demand coming from importers taking advantage of cheaper dollar put pressure on the available greenback in the market,” one dealer said.
The naira traded around 160.90 to the dollar last week, boosted by dollar inflows from oil companies and offshore investors buying local debt, prompting some users to increase their demand to hedge against future depreciation of the currency.
Traders said the naira could depreciate further to around 163 to the dollar if supply remains weak.