Naira slides on dollar supply shortage
The naira fell against the dollar to its weakest in over a week on the interbank market as Central Bank of Nigeria (CBN) failed to intervene in the market yesterday, traders said.
The local currency closed at N161.55 to the dollar, its weakest since June 14 when it closed at N162.7 to the dollar. The naira closed at N160.50 to the dollar the previous day.
'Demand for the greenback remains strong in the market, while the sales of $12 million by Agip were too little to support the naira,' one dealer said.
Traders said the CBN failed to sell dollars directly to some banks outside its regular twice-weekly auction as it had done in the last two weeks, causing the naira to lose value.
The apex bank had sold about $3 billion between May 22 and June 24 at its twice-weekly foreign exchange auction, plus an unspecified amount sold directly to banks, in its bid to reduce pressure on the local currency.
'We expect the naira to continue to lose value in the near term unless the CBN sustains its intervention in the market,' another dealer said.
At the regular forex auction, the CBN sold $300 million at N155.75 to the dollar, compared with $500 million sold at the same rate on Monday.
Nigeria's foreign exchange reserves fell 0.16 per cent month-on-month to $48.33 billion by June 24, the lowest level in more than three months, data from the banking watchdog showed yesterday.