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Nigerian naira continues slide against U.S. dollar

Posted by By Oludare Mayowa on 2009/01/09 | Views: 737 |

Nigerian naira continues slide against U.S. dollar


The Nigerian naira fell to 144.30 to the U.S. dollar on the interbank market on Thursday, traders said, continuing a slide which has seen it fall around 20 percent since the beginning of last month.

LAGOS, Jan 8 (Reuters) - The Nigerian naira fell to 144.30 to the U.S. dollar on the interbank market on Thursday, traders said, continuing a slide which has seen it fall around 20 percent since the beginning of last month.

The naira fell from a rate of 140.70 to the dollar on Wednesday, pushed by continued strong demand for the greenback coupled with a lack of central bank supply.

"There is a huge backlog of corporate demand for the dollar, which is not being met due to short supply from the central bank," one dealer said.

The central bank raised its selling rate to 139.17 to the dollar on Wednesday, compared to 135.60 on Monday, but it sold only $302 million to retail banks which dealers said was too little to lift the market.

Three oil multinationals sold about $40 million on Monday and Tuesday, traders said, but overall demand for foreign exchange -- driven partly by importers and offshore investors seeking to repatriate funds -- still outweighed supply.

"We doubt the willingness of the central bank to meet all demand for forex at its window. This will increase pressure on demand at the interbank market and lead to further naira depreciation," another dealer said.

Analysts expect the naira to continue to weaken in the first quarter of 2009 with a question mark over how far the central bank (CBN) will be prepared to intervene.

"What remains unclear is the extent to which the CBN is prepared to support the local currency and what incremental levels of devaluation to expect in 2009," brokerage Afrinvest said in its outlook for the year.

"Given the outlook for foreign currency earnings as well as numerous demands on government revenues by states, local governments, and various capital projects, we expect stringent limits to the degree of support that the CBN can offer." (Editing by Nick Tattersall and Toby Chopra)

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