Although the naira remained steady at the Wholesale Dutch Auction System (WDAS) yesterday, the currency weakened against the United States dollar at the interbank market after the central bank failed to meet all foreign exchange demand at its official auction.
The local currency closed at N162.25 to the dollar on the interbank, weaker than the N161.90 to the dollar on Friday.
Dealers said, contrary to expectation that demand would weaken because of many companies and end-users would be winding down business for the year, there was still a lot of demand in the market.
On the official window, the central bank sold $200 million at N156.70 to the dollar, short of the $248.62 million demanded. The regulator sold $200 million at N156.70 to the dollar last Wednesday.
“The naira actually appreciated towards the end of last week because of direct dollar sales by the central bank to some banks, but we are not expecting any intervention in the market until mid week, so the naira could weaken further,” another dealer said.
Traders told Reuters that the central bank may close the official window for the year after Wednesday’s auction, but the regulator could continue to sell dollars directly to banks to clear arrears of demand to help support market stability.