The naira weakened by 0.15 per cent against the dollar on the interbank market on Monday, on a renewed surge in dollar demand despite about $112m in sales by an oil company. A unit of French oil major Total sold about $112m to some lenders on Monday, but was insufficient to support the naira, according to Bloomberg. The naira fell to 165 to the dollar compared with 164.74 it closed at on Friday, due to increased dollar demand from importers and corporations stocking up for year-end sales. The naira had recovered from a 7-month low last week, as the central bank took steps to prop it up.
The currency has come under pressure in the last five weeks owing to concerns over falling global oil prices, which led to offshore investors cutting back their positions in the local debt market and repatriating their funds.
“We are expecting more oil companies to sell dollars in the market this week and a direct intervention by the central bank, which could keep the currency within range in the short term,” one dealer said.
The central bank had last week said it would continue to support the naira after the currency approached a record low amid declining oil prices and the end of United States monetary stimulus that bolstered emerging-market assets.
The CBN had since mid-September used the country’s reserves to sell dollars outside of regular auctions held Mondays and Wednesdays, according to Standard Chartered Plc.
The naira last Wednesday gained 0.2 per cent, the most since October 13 on a closing basis, to 165.10 against the dollar as of 5:07 p.m. in Lagos. The naira earlier weakened as much as 0.4 per cent to 166.07, the lowest intraday level since March 24.
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