The Central Bank of Nigeria (CBN) stepped up its foreign exchange interventions last week, selling a total of $198 million to authorized dealer banks over the course of four days. This move was aimed at enhancing FX liquidity and stabilizing the naira as the year-end approaches. Experts pointed out the significant effect of the CBN’s actions on exchange rate trends.
In the week prior, the apex bank sold $124.6 million, indicating a renewed commitment to FX auctions after launching an electronic FX trading facility for banks in December 2024. Increased liquidity at the official window was required due to the market’s high demand.
The FX sales began on Monday, with the apex bank selling $30.5 million at rates between ₦1,520 and ₦1,547. By the week’s close, the central bank had sold $197.7 million. Despite these efforts, the naira’s value remained under pressure, closing at ₦1,540 at the official market on Friday, a slight loss of ₦2 from earlier levels. Gross external reserves increased to $40.761 billion during the week, according to CBN data.
Cordros Capital Limited predicted that weak inflows from independent sources will continue to limit FX liquidity. The naira might see ongoing pressure to depreciate in the medium run if the CBN doesn’t take substantial action.
