Naira falls on low supply of dollars

Nigeria’s naira slipped against the dollar on the interbank market on Monday, driven by tight supplies of the U.S. currency and sustained strong demand from offshore investors selling their equity holdings.

The local currency closed at 165.75 to the dollar, compared with 165.65 on Friday.

A unit of Addax sold $10 million to some lenders, Eni sold $2 million while Royal Dutch Shell sold an undisclosed amount of dollars. But aggregate dollar flows were seen as insufficient to support the local currency.

The naira has been under pressure over the past six weeks from falling global oil prices and a drop in Nigeria’s forex reserves, which has led offshore investors to cut back their positions in the debt and stock markets.

Traders said the naira had weakened to around 166.02 to the dollar intraday, but recovered a little after sales of dollar by energy companies.

The local currency is expected to stay in a range in the days ahead as more energy firms sell dollars in the interbank market and central bank keeps watch over currency moves.

Reuters