Naiira Firms on NNPC Dollar Sale, Emefiele’s Comments  

The naira firmed marginally against the dollar on the interbank market on Monday on speculation that state-owned energy company NNPC would sell the U.S. currency to banks on Tuesday. 
The naira closed at N162.65 to the dollar, compared with N162.95 per dollar at Friday’s close.
Traders said many banks sold down their dollar positions in anticipation of dollar inflows from NNPC, which is expected to hit the market by Tuesday.
NNPC, which usually sells dollars to some banks on a monthly basis, accounts for about 70 percent of the volume of dollars traded on the interbank market.
“The market has also calmed since the new central bank governor made the clarification on his plan to gradually reduce interest rates, which was one of the reasons the market was jittery previously,” one dealer said.
Nigeria’s new central bank governor, Godwin Emefiele, told Reuters on Friday that the bank had no immediate plans to cut interest rates and definitely would not consider doing so until after the presidential election in February 2015.
Forex dealers said Emefiele’s comments were reassuring and had helped to reduce volatility in the market. They also helped the naira to recover some losses triggered after Emefiele had said at his inaugural press conference on Thursday that he would seek to gradually lower interest rates, which markets took as an indication that a rate cut could come soon. 
Rates have stayed at 12 percent since late 2011, helping bring down inflation but businesses say they are punitive.
Dealers said the naira should strengthen further on Tuesday if the NNPC dollar sale materialises.
Source: Reuters

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