LAGOS
(Reuters) - The Nigerian naira weakened against the U.S dollar at the
official window and on the interbank market on Monday as increased
demand squeezed greenback supply.
The local currency closed at 160.20 to the dollar on the interbank market, weaker than 159.20 at Friday's close.
At the official window, the central bank sold $350 million at
150.01 to the dollar, short of the $421.25 million demanded. The
regulator sold $250 million at 149.95 to the dollar at its last auction
on Wednesday.
"Demand for the dollars seems to be rising again despite various
measures by the central bank to curb demand at its auction," one dealer
said.
Nigeria's central bank on Friday said it will sell dollars both
directly into the market and at auctions, and raised the forex net open
position limit of lenders to 3.0 percent from 1.0 percent of
shareholders' funds.
Net open position is the amount of dollars banks can hold
relative to shareholders' funds. The central bank lowered it to 1
percent from 5 percent on October 10 to free up dollar supply to the
interbank market but traders complained the market was almost brought to
a halt by the decision.
"With the increase in net open position, which became effective
today, a number of banks were buying up dollars to cover their position,
putting pressure on the market," another dealer said.
Traders said the naira could depreciate further in the week
unless the central bank injects more dollars into the market or dollar
inflows from month-end sales by energy companies come in.
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