By BizWatch Nigeria
Key Points
- CBN FX intervention declined by 83% to $150 million in April
- Nigeria’s external reserves fell to $48.367 billion
- Naira stability supported by foreign inflows and corporate dollar supply
- Rising crude oil prices driven by geopolitical tensions
Main Story
The Central Bank of Nigeria (CBN) sharply reduced its foreign exchange (FX) market intervention by 83% in April, injecting just $150 million into the official market, down from $895 million recorded in March.
Despite the reduced intervention, the naira held relatively firm, closing at N1,374.94/US$1 at the end of April, supported by improved FX inflows and increased participation from foreign portfolio investors (FPIs).
Market liquidity remained buoyant as non-bank corporates, exporters, and other autonomous sources supplied dollars into the system, helping to offset the reduced presence of the apex bank.
However, sustained FX outflows—including foreign debt servicing obligations and intervention-related commitments—dragged Nigeria’s gross external reserves down to $48.367 billion from $49.238 billion at the start of the month.
Market Context: Oil Prices Surge Amid Global Tensions
Global crude oil prices extended their upward trajectory, driven by persistent geopolitical tensions around the Strait of Hormuz, a critical oil transit chokepoint.
Brent crude rose by 9.86% week-on-week to close at $117.04 per barrel, after hitting an intraday high of $118, pushing its year-to-date return to 77.76%.
Nigeria’s Bonny Light crude outperformed global benchmarks, surging by 10.38% week-on-week to $134.86 per barrel—its highest level since 2022—amid tight supply conditions in the Atlantic Basin and strong demand for light sweet crude.
What’s Being Said
Analysts note that ongoing diplomatic tensions involving Iran and the United States continue to disrupt oil flows, limiting the likelihood of a near-term resolution.
Iran’s move to restrict shipping access in the Strait of Hormuz, combined with continued US pressure on Iranian exports, has sustained supply uncertainty.
Additionally, the United Arab Emirates’ unexpected exit from OPEC has introduced further volatility, as markets anticipate increased production outside quota constraints.
What’s Next
While elevated oil prices may boost Nigeria’s export earnings in the medium term, analysts warn that declining reserves and reduced FX intervention could limit the CBN’s ability to stabilise the naira in the near term.
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