In a bid to stabilize the local currency, the Central Bank of Nigeria (CBN) has injected nearly $1.31 billion into the foreign exchange market. The significant volatility witnessed in April prompted heightened interventions at the official window, as the apex bank aimed to steady the naira amid an exodus of foreign portfolio investors from the markets.
Data shows that FX intervention sales to banks surged by 83% in April compared to the $714.65 million sold in March to boost liquidity in the official forex window. So far this year, the CBN has intensified its forex sales to banks, in a bid to enhance market liquidity and uphold a semblance of exchange rate stability.
The forex market came under increased pressure following a shift in global trade policies, sparking a mass exit of foreign portfolio investors over recent months. The outlook for the naira remains weak, hindered by subdued crude oil prices, production limitations, and OPEC+ plans to ramp up output, even as Nigeria struggles to meet its production quota.
So far in 2025, Nigeria’s external reserves have fallen by more than $3 billion, attributed to external debt servicing, intensified interventions in the currency market, and declining remittance inflows, with reserves closing at $37.811 billion on Friday.
On a brighter note, the CBN revealed that Nigeria’s net FX reserves climbed to $23.30 billion in 2024, up from $4.00 billion recorded in 2023. Reflecting the ongoing challenges, trading activity at the Nigerian Foreign Exchange Market (NFEM) has been characterized by liquidity swings and regulatory actions.
The NFEM rate closed at N1599.54 on Friday, improving from N1599.93 at the beginning of the week, buoyed by inflows from oil and gas exports and continuous interventions by the CBN.
Commenting on the recent monetary policy moves, AIICO Capital Limited said, “The latest OMO auction demonstrates the CBN’s commitment to utilizing all monetary tools necessary to maintain the naira’s stability.”
Analysts maintain that the CBN’s influence over market supply will play a critical role in determining the naira’s direction. With reserves still above the $37 billion mark, experts believe the CBN is adequately positioned to continue supporting the naira.
“Even though demand pressures in the FX market appear to have subsided slightly, risks persist amid global uncertainties that could hinder capital inflows over the short term. Consequently, liquidity challenges are likely to linger, sustaining pressure on the naira and necessitating further interventions by the CBN,” Cordros Capital Limited stated.
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