Naira firms, more gains expected

The naira firmed up against the U.S dollar on the inter-bank market and firmed marginally at the central bank’s bi-weekly auction on Monday with traders expecting the local currency to build on recent gains later this week. The naira traded at N160.90 to the dollar in thin trade that saw some lenders selling dollars at the inter-bank.
Naira firmed 1.2 per cent last week, after a surge of inflows from foreign investors positioning to buy treasury bills and the central bank’s dollar sales to banks. Traders said an additional $200 million sold by AMCON to some banks from its debt recovery efforts also provided support for the local currency.
“The outlook favours the naira gaining in the near term because of the gradual returns of offshore investors to the local debt market and possible dollar sales by some oil companies this week,” another dealer said. Most offshore investors scaled down their investment in treasury bills and bonds two months ago on fears of rising inflation and the debt crisis in the Euro zone, which raised demand for the dollar and caused the naira to fall. At the bi-weekly foreign exchange auction, the central bank sold $163 million at N155.87 to the dollar, short of the initial $200 million it offered and compared with $251 million sold at 155.90 naira to the dollar last Wednesday.