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By NBF News
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The unexpected increased supply of foreign exchange yesterday by the Central Bank of Nigeria (CBN) and month end sales has buoyed the naira.

Having recorded a sharp decline in value last week, the naira sold at N157.35 advancing to its strongest in a week as oil companies sold dollars to meet month-end local expenses.

The CBN had offered $250 million dollars at the Monday auction, the highest amount it had sold so far in months at its twice weekly auction, boosting forex supply.The naira had last week Friday sold at N158.22 to the dollar at the interbank market.

'The naira fell against the dollar at the interbank market due to strong demands by end users.This potentially pulled down the naira. Besides the anticipated month-end forex sales by oil companies came in at a relatively small pace. This could give the naira the needed strength,' head of research at Sterling Capital Limited, Sewa Wusu, noted.

The appreciation of the naira is 'due to end-of-month dollar sales by international oil companies which increased the supply of the greenback at the interbank market,' analysts at Greenwich Trust Group Limited led by Oladipupo Adekanmbi wrote yersterday in e-mailed note to clients.

Oil-producing companies which sell dollars to meet local expenses around month-end are the second-biggest source of foreign currency after the Central Bank of Nigeria(CBN) which sells dollars at auctions on Mondays and Wednesdays to help manage the exchange rate.

The CBN has held the benchmark interest rate at a record high 12 per cent for eighth straight times to control inflation and stabilise the naira. With the nation's inflation down to 9 per cent in January from 12 percent in December, analysts say they expect the apex bank to ease monetary policy at its next monetary policy meeting.