The naira depreciated against the United States dollar at the interbank market Wednesday as importers started to lock-in their hard currency needs at favourable rates.
The nation’s currency closed at N160.26 to a dollar yesterday, compared to the N159.90 to a dollar it stood on Tuesday.
Traders informed Reuters that some importers took advantage of the increased dollar liquidity in the market to buy more hard currency at favourable prices, exerting pressure on the local currency.
The naira firmed to its strongest in two weeks on Tuesday, buoyed by ample dollar sales by multinational oil companies.
Dollar liquidity is gradually thinning out due to buying pressure from importers, dealers said, as no additional dollar inflow came into the system on Wednesday.
Traders expect the naira to trade within the band of N160 and N160.60 to a dollar this week, unless additional dollar inflows come into the system and support the local unit.
Although details of forex transactions at the Retail Dutch Auction System (RDAS) were not published yesterday, THISDAY gathered that the naira appreciated by two kobo to close at N155.73 to a dollar at the official market.
The Central Bank of Nigeria (CBN) recently suspended the Wholesale Dutch Auction System (WDAS) and reintroduced the RDAS. Also recently, it withdrew the operating licences of 20 Bureaux De Change (BDC) operators and directed that receipts of proceeds of international money transfers should now be paid in naira.
Information from This Day was used in this report.