In a continued effort to support the naira and stabilize the foreign exchange market, the Central Bank of Nigeria (CBN) deployed a total of $669 million in foreign exchange interventions during the first quarter of 2025, according to insights from AIICO Capital Limited.
Facing declining U.S. dollar inflows and a surge in offshore demand, the apex bank responded aggressively throughout the quarter. In addition to direct market interventions, the CBN also mandated Bureau de Change (BDC) operators to acquire $25,000 from authorized dealer banks at the prevailing official rate to address pressures in the parallel market.
Despite these efforts, the nation’s external reserves suffered a substantial drop. After previously climbing to a three-year high of $43 billion, reserves declined sharply due to debt servicing obligations and sustained dollar injections into the FX markets.
The naira came under sustained pressure during March 2025, losing 2.97% to close the month at ₦1,536.82 per dollar, down from ₦1,492.49 at the beginning of the month—despite the CBN’s heavy market presence.
The official market opened the month at ₦1,510 per dollar, and robust demand persisted throughout, particularly from foreign portfolio investors and domestic corporates.
The parallel market reflected similar trends, weakening by ₦43.50 to close at ₦1,536 per dollar. Although liquidity improved temporarily due to mid-month CBN interventions, demand consistently outpaced supply.
In the final trading week of March, continued CBN dollar sales and a slight exchange rate appreciation did little to ease the broader market pressure. On a quarterly basis, the naira weakened at the NFEM window, while external reserves settled at $38.31 billion.
Analysts at AIICO Capital highlighted that, even with underwhelming foreign portfolio investor flows, the CBN is expected to maintain its support for market liquidity in the near term. However, global uncertainties—including U.S. tariff measures and potential retaliatory responses—could trigger fresh rounds of volatility and capital flight.
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