Naira Dips at Official Window As Nigeria’s Foreign Reserves Rise Above $38bn

The Central Bank of Nigeria’s (CBN) official exchange rate for the naira experienced a slight depreciation on Wednesday, slipping to N1535.61 per US dollar as FX market intervention by the apex bank moderated. This movement came as Nigeria’s external reserves breached the $38 billion mark, offering a stronger buffer for the national economy.

Data from the CBN showed that the foreign exchange spot rate at the official window moved closer to that of the parallel market, where the naira ended the day at N1536 per dollar. With a marginal difference of less than N1, analysts noted that speculative arbitrage opportunities were largely curtailed.

The rise in reserves to $38.366 billion, recorded on Tuesday, signals stronger foreign inflows and reduced pressure on Nigeria’s external balance sheet. The build-up is attributed to fresh capital from global investors, oil receipts, and lower FX outflows due to reduced central bank intervention.

Despite the improved reserve levels, oil prices remained volatile and below Nigeria’s benchmark price in the 2025 budget. Although crude output has improved marginally, the market is being affected by global disruptions beyond the control of OPEC+ producers, including Nigeria.

Analysts say that with the Central Bank currently refraining from aggressive open market operations, the foreign exchange market is likely to see more organic inflows in the coming weeks, potentially offering relief to the naira.

According to Coronation Research, foreign inflows last week surged to $1.31 billion, a notable increase from the $750 million recorded the week prior. Foreign investors contributed a dominant 62.50% share, continuing a nine-week streak of active engagement in Nigeria’s debt and capital markets.

Other contributors to FX liquidity included non-bank corporates (14.08%), exporters (12.76%), and the CBN itself (9.86%). Contributions from other corporates and individuals remained minimal at 0.33% and 0.34%, respectively.

This uptick in external reserve levels is expected to support the stability of the local currency in the near term, provided oil prices do not dip further and investor confidence remains high.