Tuesday, 23 September 2014

Naira falls 55k against dollar amidst CBN’s defense


In spite of the Central Bank of Nigeria (CBN)’s intervention through foreign exchange auction, the nation’s currency naira on Monday weakened by N0.55k against the US dollar at the inter-bank market.
The CBN on Monday offered a total of $350 million but sold a total of $349.9 to 22 deposit money banks at rate of N155.75/$ at its twice weekly Dutch Auction System (RDAS).
Consequently, the local currency on Monday closed at N163.85/$ as against N163.30 on Friday last week, according data obtained from Financial Markets Dealers Quotation (FMDQ).
Analysts had anticipated sustained pressure on the local currency this week in spite of expected dollar sales from oil companies.
“Dollar demand from politicians holding their assets in hard currency ahead of elections next year has increased pressure on the local currency,” one dealer told Reuters.

The central bank was selling dollars directly on the interbank market to try to prop up the currency, which has shed almost 3.5 percent this year, for most of last week.
On Monday, the local unit of Royal Dutch Shell sold an undisclosed amount of dollars to some lenders, which was not enough to support the naira.
The naira has “depreciated substantially” on the interbank market in the past two months, Central Bank Governor Godwin Emefiele noted during last Friday’s interest-rate-setting meeting, citing risks from declines in global oil prices and domestic production.
Brent crude oil fell below $98 a barrel on Monday, dropping for the third session in four, as sluggish demand and ample supplies outweighed expectations of a cut in oil output from the Organization of the Petroleum Exporting Countries.
Businessday

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