Nigerian naira firms on anticipated NNPC dlr sale
April 28, 2011 3:58 AM EST
The Nigerian naira firmed against the U.S. dollar on Wednesday on the interbank market as speculation of a dollar sale by the state-owned energy firm NNPC forced some banks to sell a portion of their holdings.
The naira closed at 154.38 to the dollar on the interbank on Wednesday compared to 154.68 on Thursday even as the central bank did not meet all the demand at its bi-weekly foreign exchange auction, traders said.
The bank sold $250 million at 152.92 per dollar at its only forex auction this week, short of the $277.07 million demanded and $323 million sold at 152.76 a dollar at its last auction.
"There are speculations of a planned dollar sale by the NNPC - state-run energy company - and other multinationals, which forced some banks to offload portions of their dollar holdings into the market," one dealer said.
Some energy firms sell dollars in a monthly cycle for naira to fund their local obligations. This provides dollar liquidity for interbank transactions and helps support the local currency.
Traders said the naira should firm further in the coming days if the NNPC and other energy firms eventually sold dollars as part of their month-end activities.
A poll of nine traders and analysts by Reuters sees the naira strengthening slightly, to 153.50 to the dollar by the end of June, as demand for hard currency before last week's presidential elections fades and foreign portfolio inflows start to pick up