Nigeria naira strengthens after intervention
Posted: Fri May 26, 2006 9:56 pmLAGOS (Reuters) - Nigeria's central bank intervened in the foreign exchange market on Friday, selling $118 million in a special auction to support the naira, traders said.
The naira strengthened to 128.65 to the dollar at the interbank market on Friday, reversing Thursday's depreciation which saw it drop to 128.80, they added.
Dealers said the market reacted to the increased supply of dollars immediately after the result of the auction was announced.
"The intervention was meant to support the naira from further depreciation," one dealer said. "The new dollar inflow would keep the naira stable for now."
The central bank sold just $64.25 million at its regular Wednesday auction, versus an offer of $120 million, because many bids quoted by participating banks were at rates stronger than the central bank's established band.
The central bank is the largest supplier of dollars to the foreign exchange market in oil exporter Nigeria, because it is recycling dollar-demoninated oil receipts.
Demand for dollars is fuelled by a wide differential between the interbank market and black market, where some banks sell dollars at 143 naira.
Source: Reuters
The naira strengthened to 128.65 to the dollar at the interbank market on Friday, reversing Thursday's depreciation which saw it drop to 128.80, they added.
Dealers said the market reacted to the increased supply of dollars immediately after the result of the auction was announced.
"The intervention was meant to support the naira from further depreciation," one dealer said. "The new dollar inflow would keep the naira stable for now."
The central bank sold just $64.25 million at its regular Wednesday auction, versus an offer of $120 million, because many bids quoted by participating banks were at rates stronger than the central bank's established band.
The central bank is the largest supplier of dollars to the foreign exchange market in oil exporter Nigeria, because it is recycling dollar-demoninated oil receipts.
Demand for dollars is fuelled by a wide differential between the interbank market and black market, where some banks sell dollars at 143 naira.
Source: Reuters