Nigeria Content Online

The naira weakened to 152.40 to the U.S dollar on Tuesday,
from 151.75 previously, in the interbank market after heady buying of
dollars by some banks, traders said.

“A couple of banks are buying
up dollars for reasons we don’t know and this has driven the rate
beyond market resistance level,” one dealer said.

“We are completely in the dark on the basis for the prevailing exchange rate at the interbank.”

Dealers said a lack of dollar
inflows from sources other than the central bank and the need by some
businesses to buy dollars to meet their immediate obligations also
helped weaken the naira.

The naira also depreciated at
the official window after the central bank failed to supply all $530
million demanded at its auction on Monday.

The regulator sold $450 million
at N148.85 to the dollar compared to $250 million it sold at
N148.81 per dollar at last Wednesday’s auction.

Traders said the bulk of demand at the auction came from local fuel importers.

“I don’t see the naira falling
further because the rate at the interbank is already 2.0 naira above
the official rate and there will be another auction on Wednesday,”
another dealer said.

Nigerian banks are not allowed
to trade the dollars they purchase at the central bank’s bi-weekly
auction among themselves. Lenders in sub-Saharan Africa’s
second-biggest economy can only trade dollars they purchase from oil
majors and other importers.