The naira continued to gain on value, firming against the dollar yesterday as the Nigerian National Petroleum Corporation (NNPC) sold dollars, complementing the auction by the Central Bank of Nigeria (CBN), traders said.
The naira closed yesterday selling at N161.1 to the dollar on the interbank market, firmer from N161.8 at the previous day’s close.
“The market received a liquidity boost from the sales of about $350 million by the NNPC today (Wednesday) and this helped the naira to gain value,” one dealer said.
The naira has been under pressure since last month, when offshore investors began selling out of the local debt market and repatriating their proceeds after the United States Federal Reserve signalled an end to its monetary stimulus.
Nigeria’s central bank resumed sales of forward contracts on the dollar to support the naira at a forward foreign exchange auction, the first since June last year.
Results of the auction have yet to be announced, but dealers said demand was low.
The central bank sold $300 million at N155.76 to the dollar at its regular twice-weekly auction, compared to $500 million sold at the same rate on Monday.
“We see the naira gradually depreciating in the market since the NNPC has sold its dollar and there is no major inflow expected for now,” another dealer said.