Nigeria's naira closed on Wednesday at its strongest level against the dollar since early June, traders said, supported by higher than expected dollar sales by energy companies and the impact of central bank tightening measures.
| Naira and dollar |
The local unit of Shell sold a large amount of dollars to banks twice this week, while Chevron sold about $100 million to lenders on Tuesday, traders said.
"The market is liquid because of unusual volume of dollar so far sold by some energy company this week and this has help pushed up the value of the naira," one dealer said.
Most oil companies operating in Africa's top crude oil exporter sell dollars on monthly cycle to obtain naira to fund their domestic obligations.
Dealers said apart from the unusual large dollar sales by oil companies, central bank measure limiting dollar cash sales to bureau de change has impacted positively on the value of the local currency.
Central bank reintroduced retail Dutch auction system of foreign exchange last month and limit dollar cash sales to bureau de change outlet to $250 million weekly, from $1 million allowed previously and banned importation of dollar cash by lenders.
"We have started seen the impact of the central bank's measure on speculative bids in the market," another dealer said. "The increase in dollar supply this week would have been mop up by speculators if not for the new policy which limit dollar sales to bureau de change."
Dealers said the naira should trading around this level in the near term if more oil companies continue to sell dollar in the market.
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