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Naira depreciates on importer dollar demand

by Business News Report

Naira depreciated against the U.S. dollar at the inter-bank market and at the central bank’s bi-weekly auction Monday as import activity gradually resumed in the south of the country after strikes over the withdrawal of fuel subsidies. Traders said the outbreak of violence in the northern city of Kano last week in which Islamist insurgents killed at least 178 people had little impact on the naira. They said the naira depreciated due to increased dollar demand by importers mostly based in the southern part of Africa’s second biggest economy. The naira closed at 161.30 to the dollar on the inter-bank market on Monday, higher than Friday’s close of 160.90 naira. Bankers said strong demand for the dollar by importers has reduced the level of liquidity in the market, causing the naira to weaken. NNPC sold about $550 million to some banks on Friday, providing support for the local currency which firmed then to its strongest level in 18 days but liquidity has dried up from the system.

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