By Babajide Komolafe
The Naira appreciated further by 20 kobo at the official foreign exchange market, even as interbank interest rate rose slightly on Wednesday.
At the interbank money market, interest rates for Call lending and Seven days lending rose slightly for the first time in a long while.
Interest rate on Call lending rose to 2.225 from 2.2 per cent while interest rate for Seven days lending rose to 4.25 from 4.0167 per cent.
At the first foreign exchange auction held on Monday at the Wholesale Dutch Auction System (WDAS) session, the exchange rate dropped to N148.41 from N148.61 per dollar.
The decline reflectedÂ 34 per cent decrease demand in foreign exchange demand recorded at the auction.From $271 million, demand dropped to $176.63 million.Â All the demand was satisfied by the Central Bank of Nigeria.
Last week, a combination of increased foreign exchange supply by the apex bank and oil firms particularly, the Nigeria National Petroleum Corporation (NNPC) helped the naira to appreciate by 10 kobo.
From N148.71 per dollar the previous week, the official exchange rate closed to N148.61 while the interbank exchange rate remained stable at N150.4 per dollar.
In the international currency market, the euro rose from its lowest level against the dollar since May after the Greek government said it will announce new deficit cuts tomorrow, increasing speculation that a solution to its debt crisis may be nearing.
The 16-nation common currency appreciated against the pound as a spokesman for Greeceâ€™s government said the nation will await reaction to the cuts before selling any bonds.
The Canadian dollar surged after the nationâ€™s central bank kept its interest rate at a record low and said inflation and economic output have been higher than policy makers expected.
â€œThere is just a short squeeze on the euro-dollar,â€ said Sebastien Galy, a currency strategist at BNP Paribas SA in New York.Greece said it will announce new deficit cuts and wait to see how it takes before going to market with their bonds.
A short squeeze is when traders, seeking to cover wrong-way bets, buy back a currency they initially sold.The euro gained 0.1 percent to $1.3548 at 9:58 a.m. in New York.
It earlier fell as much as 0.9 per cent to $1.3436, the lowest level since May.It gained 0.1 per cent against the pound, to 90.59, and traded at 120.76 yen.
Euro-dollar â€œmade a marginal new low this morning and has so far not sustained the move,â€ Citigroup Inc. technical analysts led by Tom Fitzpatrick in New York wrote in a report today.
â€œThe failure to sustain the move to a new trend low this morning is beginning to suggest a turn back up is the risk as was the case at the start of March 2009.â€