The naira strengthened against the dollar on the interbank market on Monday, reaching its strongest in almost three months, as a unit of Royal Dutch Shell sold dollars and demand for hard currencies weakened.
According to Reuters, the naira closed at N160.90 to the dollar, up 0.36 per cent over Friday’s close of N161.48 to the dollar.
The last time the naira was that strong was May 5, when it closed at N158.75 to the dollar.
A unit of Shell sold an undisclosed amount of dollars to some lenders, providing dollar liquidity and support for the naira. Month-end dollar sales by energy companies have supported the local currency for the past three weeks, keeping the naira within a band of N161.35-N161.90 against the dollar
“We are still expecting a further gain in the naira value this week,” one dealer said, pointing out that the Nigerian
National Petroleum Corporation and some other oil companies had yet to sell dollars.
Most of the energy companies operating in the country buy the local currency at the end of the month to fund domestic obligations.
The naira had closed unchanged against the dollar on the interbank market last Wednesday, after two days public holiday to mark the Muslim festival.
Supported by dollar sales by two major energy companies, the local currency closed at N161.85 to the dollar, the same level it had closed the previous Friday before the holiday.
Month-end dollar sales by some energy companies have continued to provide support for the local currency in the last two weeks, keeping it within the band of N161.50-N162 against the dollar.
“We see the naira stable around the present band in the near term, with more dollars expected from some energy companies,” one dealer had said.