The Nigerian naira strengthened against the US dollar on the interbank market on Monday, supported by dollar sales by energy companies Royal Dutch Shell and ExxonMobil to some lenders.

The local currency closed at 161.70 to the dollar on the interbank market, firmer than the 161.90 to the dollar it closed at last Friday.

Traders said Shell sold about $100 million and ExxonMobil sold about $45 million to some lenders, boosting greenback liquidity in the market.

“There was strong demand for the dollar ... but for the inflows from the oil companies, the naira would have weakened today,” one dealer said.

The central bank two weeks ago raised the cash reserve requirement for lenders in Africa's second-biggest economy to 12 percent from 8 percent and reduced net open foreign exchange positions to 1 percent from 3 percent to support the naira.

Traders say its impact has been limited because of high dollar demand.

“We expect that the naira will depreciate again in the coming days because of the prevalent strong dollar demand in the market, unless there are more inflows from oil companies,” another dealer said. - Reuters