Currency dealers Monday maintained strong demand for the US dollar at the Central Bank of Nigeria’s (CBN) regulated Wholesale Dutch Auction System (WDAS) as demand once more outstripped supply.

The rising demand for the greenback had led the regulator to increase its supply to $400 million last week.

Whereas the regulator offered a total of $400 million to the 22 banks that participated at the first bi-weekly auction, a total demand of $468 million was put up by dealers.

The demand however fell slightly by $5 million, compared with a total of $473 million demanded last Wednesday.

The Naira climbed marginally by 2 kobo at the WDAS as it traded at N151.26/$1 as against the N151.28/$1 it sold at last Wednesday’s auction.

However, some currency dealers have said that the recognition of the Chinese Yuan (CNY) as a tradeable currency in the Nigeria would in the long run; douse the occasional pressure in the forex market. Dealers forecast that the fluctuations in the forex market due to the rising need for the dollar would be significantly reduced once banks begin to issue Yuan accounts to their customers.

The CBN had added the CNY to a list of currencies that can be used for trade settlement in Nigeria last December following an increase in the flow of trade between Nigeria and China.

Head of Africa and Senior Representative Director in Nigeria, CommerzBank, Mr. Florian Witt, also stressed that trading in the CNY would further strengthen bi-lateral trade between Nigeria and China.

Witt argued that China was encouraging countries to use the CNY for trade settlement and diversify bilateral trade away from the dollar. He stated that once the CNY becomes fully liberalised, the demand for the CNY would increase and the dollar demand would decrease.

He added: “We have noted that the Letters of Credit (LC) that are been issued towards China from Nigerian banks have increased heavily and the Nigerian bank feels much more comfortable that it is done by a bank that they know and secondly a bank that has branch network in China. So I think that Nigerians have realised that something was going on and somebody from one of the banks must have advised the CBN to adopt the Yuan.”