The naira weakened yesterday at the interbank market on increased demand for foreign currency to fund fuel imports.
Having sold at 157.3 to the dollar at the interbank last week Friday, the currency weakened further to 157.33 to the dollar.
With the country having to rely on imports to meet 70 per cent of its fuel needs due to inadequate refining capacity, fuel imports have been a source of pressure on the naira.
According to the Chief Executive Officer of Valuechain Investment Limited Tunde Ladipo; "Some oil importers got their import permit from the Pipeline and Petroleum Pricing Regulatory Agency(PPPRA) last week and are demanding dollars."
Analysts however expect the naira to firm up by the end of the week on month end foreign exchange sales by oil companies.
"The local currency was weakened due to strong corporate demand. it however appreciated slightly on Friday to close at 157.30 following inflows from foreign portfolio investors who are taking positions in fixed income government securities.
"We expect to see increased month end forex sales by oil companies this week and this should help strengthen the naira to trade stronger above current levels," said Head of Markets at Sterling Capital Limited, Sewa Wusu.
The Central Bank of Nigeria (CBN) kept its benchmark interest rate unchanged for the eighth time last week.The inflation rate in December eased to 12 per cent, from 12.3 per cent in the previous month, as the effects of flooding that damaged agricultural output last year began to subside.
The yield on the country's 16.39 per cent domestic bonds due January 2022, fell two basis points 11.28 per cent in the secondary market, according to January 25 data on the Financial Markets Dealers Association (FMDA)'s website.
Meanwhile, interbank lending rates went in both directions with the shorter end rates rising while the longer termed rates dropped.