Lagos - Naira fell to its lowest level in two months against the U.S dollar on the interbank market yesterday, on strong dollar demand from investors repatriating their dividends abroad, traders said. The naira closed at 158.90 to the dollar on the interbank market, the lowest since the middle of February, compared with the 158.03 naira it closed at on Tuesday, according to Reuters.
“The market was hit by large demand for the dollar with which it could not cope with due to lack of dollar flow, putting pressure on the naira,” one dealer said.
Dealers said several foreign investors are taking profit on their investments, increasing pressure on the local currency.
The naira had traded around the 157.10-157.90 naira to the dollar band for the better part of the last two months on the impact of dollar sales by oil companies and offshore investors who are investing in Nigeria’s short-dated debt notes.
“We see the naira depreciating further in the coming days unless the central bank intervenes to calm the market,” another dealer said.
The local unit remains within the central bank’s 150-160 target band.
On the official window, the central bank raised its supply to $200 million and sold at 155.70 to the dollar, compared with $150 million sold at 155.70 to the dollar on Monday.