Naira weakens on fuel importers’ demand

The naira depreciated against the U.S dollar on the inter-bank market, as strong dollar demand for the local currency from fuel importers held down the local unit. The naira closed at the inter-bank market at N157.95 to the dollar, weaker than the N157.75 it closed on Friday. Bank treasurers said some fuel importers were issued fresh import licences, boosting dollar demand. This was combining with insufficient dollar supply from oil companies were pilling pressure on the local currency.
“Some oil importers have been issued fresh round of licences to import fuel, while outflows to dividend payments by some companies are increasing demand for the dollar and putting pressure on the naira,” one bank foreign exchange dealer said.
Bank foreign exchange officials said that although the NNPC sold about $500 million to some banks last week, the impact of the dollar sales on the naira was subdued because the company sold at a rate close to the prevailing market price, leaving too small a margin for lenders.
“We see rate crossing the N158 naira to the dollar mark unless there is significant dollar flow from multinational oil companies to counter demand,” another forex dealer said. At the official window, the central bank sold $150 million at N155.70 to the dollar, compared with $150 million sold at N155.75 to the dollar at last Wednesday’s auction.