According to the Financial Market Dealers Association (FMDA), the naira leapt by 69 kobo to close at N161.1 to a dollar on the interbank market, slightly above the N161.80 to a dollar it closed on Tuesday.
“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,” Reuters quoted a dealer to have said.
The naira had 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 signaled an end to its monetary stimulus.
The Central Bank of Nigeria (CBN), 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 were yet to be announced but dealers said demand was low.
The central bank had sold $300 million at N155.76 to a dollar at its regular twice-weekly auction, compared with the $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.
However, the Deputy Governor (Operations), CBN, Mr. Tunde Lemo, warned that currency “speculators should be careful because they will loose their shirts.”
Lemo, who spoke in a recent interview with THISDAY added: “If you look at currencies all over the globe, you will not see a particular smooth trajectory of rates. Even the United States dollar, the Japanese Yen, the Renminbi, the euro and other strong currencies, you are not going to see a particular trajectory and it goes like that either upward or downward.
“You are going to see movements up and down. But it is only when you trend over a fairly long time series that you then begin to see the trend and that is generally what the central bank is doing. The Nigerian economy is still very strong and resilient.”
Information from This Day was used in this report.