The Nigerian naira snapped a two day losing streak against the U.S. dollar on Friday, lifted by banks selling down hard currency positions to remain within stipulated central bank limits after inflows from their offshore clients, dealers said.
| Nigeria and US currency |
The unit closed at 160.20 naira to the greenback on Friday, firmer than Thursday's close of 160.75 naira. It closed at 160.50 naira last Friday.
Offshore investors sold dollars to lenders to buy naira assets while banks in return had to sell the hard currency on the interbank market to stay within a regulatory limit, dealers said.
"Some lenders sold part of the dollar inflows from their offshore customers to the market today, which supported the naira," one dealer said.
The central bank does not allow banks to hold more than one percent of their equity in foreign exchange reserves, hence lenders must sell hard currency to stay within the limit.
The naira hit a two-week high of 159.80 to the dollar on Tuesday on dollar inflows, and dealers had expected further rise. But strong demand subsequently soaked up liquidity to drag the naira lower on Wednesday.
Dealers say the naira may remain at current 160 levels next week, supported by a 55 billion naira ($343 million) debt auction next week that is epxected to draw foreign participation and boost dollar supply.
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