Nigerian naira weakens against US dollar

LAGOS: The Nigerian naira weakened against the US dollar on the inter-bank market on Wednesday after the central bank failed to meet lenders' demand for foreign currency at its bi-weekly auction, traders said.

The local currency traded at 152.95 per dollar on the inter-bank market compared with 152.52 Tuesday's closed and weaker than the 152.30 to the dollar on Monday.

At the bi-weekly foreign exchange auction, the naira lost some ground as the central bank sold $400 million at 150.46 to the dollar, short of the $518 million demanded and compared to $400 million sold at 150.26 on Monday.

"The naira depreciated after the central bank announced the result of its forex auction with unmet demand of about $118 million," one dealer said. "The market simply took its cue from the depreciation at the official window."

Traders had expected the naira to regain some strength on Wednesday in anticipation of dollar inflows from oil majors, but none of the energy firms sold dollars which created a supply gap in the market.

Most of the oil companies operating in Africa's top energy producer sell dollars to some lenders on a monthly basis to obtain naira for their local obligations.

"We are expecting Exxon Mobil and other oil majors to sell part of their dollars before the end of the week and this could provide some supports for the naira," another dealer said.

Nigeria's central bank on Tuesday hiked its benchmark interest rate by 75 basis points to 8.75 percent as part of a move to tighten money supply and curb excess demand for the foreign currency by exporters and other end-users.

Copyright Reuters, 2011