Naira depreciates to six-week low on strong foreign exchange demand

The naira dropped in value to its weakest in six weeks against the dollar at the inter-bank market, on strong buying of dollars by some banks for their customers and foreign investors selling down T-bills, bank treasurers said. The local currency weakened to N157.85 to the dollar, its lowest since March 28, from N157.55 to the dollar on Tuesday.
“We have a lot of demand in the market from some banks filling their customers’ requirements and with no significant dollar flow from oil companies,” a bank treasurer said. He said some offshore investors were selling a good chunk of their Treasury bill holdings. The naira has seen strong support from offshore investors, investing in local debt because of attractive yields, helping to support dollar supply to meet domestic demand.
“Some foreign investors are gradually exiting the treasury bills market and this has exerted pressure on the local currency,” another bank treasurer said. Others said the naira could depreciate to N158 to a dollar mark this week if there is no significant dollar flow to the market from oil companies. On the official window, the central bank sold $150 million at N155.75 to the dollar, compared with $120 million at N155.75 to the dollar.