RTRS: Nigeria naira hits 4-month low on strong dlr demand
LAGOS, Sept 19 (Reuters) - The Nigerian naira fell to its weakest in four months against the dollar on the interbank market on Monday after the central bank failed to clear all demand for the greenback at its bi-weekly forex auction.
The local currency closed at 156.80 to the dollar, its weakest since May 12 and lower from 156.20 at Friday's close.
Traders said strong demand for dollars and the inability of the central bank to meet all demand at its auction had forced users of foreign exchange to redirect their bids to the interbank market, putting pressure on the naira.
At the official window, the central bank sold only $350 million at a rate of 153.91 naira to the dollar, short of the $467.56 million demanded but equal to the $350 million sold at 153.54 per dollar at its last auction on Wednesday.
"We have expected the central bank to clear all the demand at the auction in view of its position to defend the naira and the fact that there has been persistent strong demand for dollars in the market," one dealer said.
Traders said despite cumulative sales to lenders of $750 million in two tranches by state-owned energy firm NNPC last week, dollar liquidity in the interbank market remained tight, leading to pressure on the naira.
"The naira will continue to be under pressure in the coming days unless the central bank intervenes at its next auction on Wednesday and clears all the arrears of unmet demand," another dealer said.
The central bank said earlier it will announce its interest rate decision on Monday, a day earlier than usual. No official time was given but Governor Lamido Sanusi is expected to address the media at around 1530 GMT.
No reason was given for the shorter meeting this month but analysts said an International Monetary Fund meeting in the United States this week may be dragging MPC members away.
Seven of 13 analysts polled by Reuters expect the bank to raise interest rates by 25-50 basis points, with the rest predicting rates will be unchanged at 8.75 percent. (Reporting by Oludare Mayowa; Editing by Joe Brock and Catherine Evans)
