Nigerian naira hits 3-month high

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Nigeria's naira currency strengthened to its highest in three months on the interbank market on Monday, after the state oil company sold about $50 million to some lenders amid tight naira liquidity.

The naira closed at 157.70 to the dollar, a level last seen on May 14. It had closed at 158.40 to the greenback on Friday.

Nigeria's currency has gained about 2.47 percent in the past week after the central bank introduced tighter measures to control money supply two weeks ago.

The central bank in July raised the cash reserve requirement for lenders to 12 percent from 8 percent and reduced net open foreign exchange positions to 1 percent from 3 percent, to restrict the money supply and support the currency.

The bank also barred banks that borrow naira funds from its official window from using those funds to buy dollars at its by-weekly auction, a bid to crack down on currency speculation.

“The sale of about $50 million by ... (state oil firm) NNPC and the fact that some banks sold down their positions to stay within their approved ... foreign exchange position provided support for the naira,” one dealer said.

Dealers said the naira should hover around 157.70-158.50 band in the week, as the market remained relatively dollar liquid.

On the bi-weekly foreign exchange auction, the central bank sold $147 million at 155.83 to the dollar, less than the $180 million it had offered, and a lot less than he $318 million sold at same rate last Wednesday. - Reuters

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