Naira falls on declining dollar availability

The naira eased against the United States' dollar on the interbank market on Wednesday as importers took advantage of the increased dollar liquidity in the market to buy more hard currency at favourable prices.

The local currency closed at N160.35 to the dollar, compared with Tuesday's close of N159.8.

The naira had firmed to its strongest in two weeks on Tuesday, buoyed by ample dollar sales by multinational oil companies.

Dealers said dollar liquidity was gradually thinning out due to buying pressure from importers, as no additional dollar inflow came into the system on Wednesday.

Traders expect the naira to trade within the band of N160-N160.6 this week, unless additional dollar inflows come into the system and support the local unit.

The naira fell the most on September 30, the highest in more than 18 months, as the Central Bank of Nigeria held its last currency auction before the implementation of tightened controls of the sales.

The local currency retreated by 1.1 per cent to N161.55 per dollar in Lagos, its biggest drop since January 2012 on a closing basis.

On October 2, the CBN replaced its scheduled wholesale foreign exchange sales with retail auctions to curb dollar demand.

The central bank offers foreign currency twice a week to keep the naira within a range of three percentage points above or below 155 per dollar.

On September 26, the CBN announced new measures to tackle money laundering, which it said was weakening the naira and risked pushing up inflation.

CBN Governor, Sanusi Lamido, had linked the dollarisation of the economy to early political campaigning for the 2015 elections.