Nigerian naira weakens to fresh 20-month low

Posted by African Examiner Business News, Featured, Latest Headlines Saturday, September 7th, 2013

Nigeria Naira and US Dollars

Nigeria’s naira weakened to a fresh 20-month low against the U.S. dollar on the interbank market on Friday, as direct central bank forex sales to lenders failed to meet demand, traders said.

The naira closed at 164.1 to the dollar, compared with a 163.6 close on the previous day. The local currency fell to 163.7 to the dollar on Aug. 29, its weakest level since Dec. 22, 2011 when it ended at 164.5 to the dollar.

The central bank sold dollars to some lenders directly towards the end of trading but the volume was not enough to calm the market and support the local currency, traders said.

Nigeria’s central bank in July hiked the cash reserve requirement for public sector deposits to 50 percent from 12 percent, in a bid tighten naira liquidity and shore up its value.

Strong demand for dollars by offshore investors selling off local debt and stocks has added pressure on the local currency.

Reuters