Despite the low supply of foreign exchange to the market by the Central Bank of Nigeria (CBN) at yesterday's auction, the value of the naira inched up a bit to sell at 157.30 to the dollar at the interbank market.
The apex bank had sold $120 million at yesterday's auction compared to $180 million which it sold at the Monday's auction.
The value of the naira had headed for the lowest in three weeks amid speculations that the CBN would sell fewer dollars at the auction, selling at 157.38 to the dollar mid-day.
"Demand increased at the interbank market as dealers anticipated small sales volume at the central bank auction," Tunde Ladipo, chief executive officer of Valuechain Investment Ltd., said on phone yesterday. "Oil company sales have also declined, adding to the pressure."
But dealers said the naira could weaken to 157.70 against the dollar by the end of the week unless offshore investors participating in a bond auction inject hard currency into the market.
"We expect the naira to depreciate further in the week because demand for the dollar remains strong and dollar supply is weak," one dealer said. "I think the naira is still expected to depreciate further in view of strong dollar demand," Wusu noted.
The chief executive of the Financial Market Dealers Association (FMDA), Wale Abe, noted that the movement of the naira "is a normal sequence of the market based on demand relative to supply.