Naira gains at inter-bank on oil firms foreign exchange sales

The naira strengthened against the U.S dollar at the inter-bank market on Wednesday, supported by dollar sales by Shell and Nigerian Liquefied Natural Gas (NLNG) Company to banks. The local currency closed at N161.55 to the dollar, firmer than N162.70 to the dollar at Tuesday’s close.
Traders said Shell sold around $100 million, while NLNG sold $15 million to banks, boosting dollar liquidity in the market and providing support for the naira. On the official window, the central bank sold $250 million at N156.85 to the dollar, compared with $198.12 million sold at N156.70 to the dollar on Monday. The central bank again did not disclose the amount of dollar demanded at its bi-weekly auction.
“The central bank continues to advise banks on the level of bids they should bring to the auction. I think the essence is to reduce pressure on the auction and give the impression that demand has been subdued,” one trader said. Bankers said the inflows from the oil companies and speculation that the state-owned energy firm NNPC plans to sell dollars to some banks this week should keep the market liquid and continue to provide support for the local currency.
“We don’t see the naira depreciating in the near term because of the expected dollar sales by the NNPC and other oil companies,” another dealer said. Nigeria’s inter-bank foreign exchange market remained shut during a strike called by the labour union to protest hike in fuel prices in Africa’s second largest economy. Nigeria’s economy lost an estimated N207.4 billion ($1.27 billion) due to an eight day strike this month prompted by a dispute over fuel import subsidies, the national bureau of statistics said on Wednesday.