Nigerian naira weakens on interbank surge in demand for dollars

LAGOS March 11 (Reuters) - The Nigerian naira NGN=D1 fell against the U.S dollar on the interbank market on Thursday, hit by a sudden surge in demand for the greenback from banks trying to cover their positions, traders said.

The naira was trading at 150.60 to the dollar, down from 150.48 at Wednesday's close, dealers said.

The central bank sold $174.31 million at 148.25 naira to the dollar at its bi-weekly auction on Wednesday, less than its initial offer of $250 million and the $242 million it sold at 148.31 naira a dollar on Monday.

Dealers said the naira depreciated because some bids that failed at the official window came to the interbank market, putting pressure on dollar supply in the market.

"The sudden increase in demand in the interbank (market) was due to pressure from people divesting from fixed-income assets and taking their funds out through the interbank (market)," one dealer said.

Traders said energy firm Total sold about $15 million to some banks on Wednesday, but that was not enough to ease the pressure on the market.

Bankers said yields across all fixed-income assets have been falling since the central bank last week cut its Standing Deposit Facility (SDF) rate by 100 basis points to 1.0 percent, prompting many foreign investors to pull out their funds. (Reporting by Oludare Mayowa; Editing by Tume Ahemba and Susan Fenton)