Nigerian naira at record low close against dollar despite intervention

The Nigerian naira posted a record low closing level against the dollar on Monday, despite the Central bank intervention to try and halt its slide, which is being driven by worries about the impact of plunging oil prices on the economy.

The CBN sold an undisclosed amount of dollars to commercial banks, but dealers said it was not sufficient to lift the naira, which closed 2.9 percent weaker than at its previous close on Friday.

The central bank has struggled to keep the naira within its preferred band even after devaluing the currency by 8 percent last Tuesday in a bid to halt a decline in the foreign reserves of Africa's leading energy producer. Oil sales provide around 95 percent of foreign exchange.

On Monday the naira touched an intraday low of 184.42 to the dollar before the bank's intervention. Afterwards, it recovered very slightly to end at 184.10 naira to the dollar, a record low closing level. Downward pressure came partly from concerns that foreign investors would demand dollars to pull out of local assets, dealers said.

The central bank's target band since the devaluation is 5 percent plus or minus 168 to the dollar, but doubts remain about whether the devaluation went far enough given the likelihood of continuing low oil prices and the fact that Nigeria's oil savings were being depleted even when crude prices were at a record high.

The coming weeks will test the bank's ability to maintain that level -- the naira is trading well below it and forex reserves are still being run down.

Nigeria's share index fell 1.8 percent on Monday, dragged lower by oil stocks Oando and Seplat.