By Babajide Komolafe
LAGOS — The naira, Wednesday, depreciated again by 15 kobo at the official foreign exchange market as the Central Bank of Nigeria, CBN, cuts foreign exchange supply by 38 per cent even as Nigeria’s foreign exchange reserves dropped to $32.55 billion by August 1 from $33.54 billion on July 22.

The naira, however, continued its appreciation at the interbank segment yesterday, gaining eight kobo.

The Wholesale Dutch Auction, WDAS, session conducted by the CBN indicated that demand fell by 29 per cent to $313.59 million from $443.9 million. But the CBN also reduced amount supplied and sold to $250 million from $400 million on Monday. As a result, the official exchange rate fell to N150.77 per dollar from N150.62 on Monday, indicating 15 kobo depreciation.

The  naira had depreciated by 18 kobo at the auction conducted on Monday, hence it has depreciated by 33 kobo at the official market this week.

Foreign reserves fall to $32.55bn

Nigeria’s foreign exchange reserves dropped to $32.55 billion by August 1 from $33.54 billion on July 22, the CBN’s latest figures showed yesterday. Nigerian foreign reserves were lower than a level a year ago, when they stood at $37.08 billion.

Currency dealers said the most recent decline in reserves was partly explained by a surge in demand for U.S. dollars on the domestic market. The CBN hiked its benchmark interest rate last month by 75 basis points to 8.75 percent, partly to help curb growing demand for foreign reserves.

Meanwhile the naira strengthened marginally against the U.S dollar on the inter-bank market NNPC sold about $400 million to some banks. The local currency closed at 152.55 to the dollar on the inter-bank market compared to Tuesday’s N152.60 close as the market response to the large dollar sale was marginal due to a shortfall in supply at the official window, bankers said.

The central bank sold $250 million at N150.77 to the dollar at the auction, short of the $313.59 million demanded and the $400 million sold at N150.62 per dollar on Monday. “Most banks used the dollars sold by the NNPC to cover the short position at the auction and coupled with the fact that the central bank allowed the naira to depreciate, the sales had little impact on the market,” one dealer said.

Many of the energy companies operating in Africa’s top crude exporter sell dollars monthly to lenders to obtain naira for their domestic operations. “We are not expecting much dollar inflow again and this could have negative impact on the naira rate in the coming days,” another dealer said. Bankers said the naira could trend upward to around 152.90-153.20 next week as dollar liquidity thins out.