The Nigerian naira experienced mild pressure against the US dollar in the foreign exchange market, despite the Central Bank of Nigeria (CBN) maintaining its efforts to enhance FX supply.
The Apex Bank’s regular intervention has played a critical role in maintaining the local currency, averting a more dramatic devaluation. However, market observers feel that FX sales to banks offer only a temporary solution to Nigeria’s exchange rate difficulties.
According to market data, the naira weakened marginally by 0.01%, closing at ₦1,530.62 per US dollar in the official FX window. Despite this, pressure on the currency remained relatively subdued due to the CBN’s intervention.
The naira has faced renewed volatility following a drop in FX inflows into the official window, which declined from $1.34 billion to $1 billion last week. To cushion the impact, the CBN has maintained FX sales to banks. Analysts suggest that with sufficient dollar liquidity in the banking sector, Bureau de Change (BDC) operators are less likely to experience a forex shortage, given the Apex Bank’s approved $25,000 weekly FX allocation to banks.
For the sixth time in two weeks, the CBN has injected liquidity into the FX market, ensuring a steady dollar supply. As a result, the Nigerian foreign exchange market experienced relative stability on Thursday. The CBN sold $92.1 million at exchange rates between ₦1,526.17 and ₦1,535, according to an update from AIICO Capital Limited.
This marked the sixth consecutive FX intervention by the CBN in its bid to stabilize the naira. A day earlier, the bank had sold $44.75 million within a range of ₦1,522.70 to ₦1,531 to manage the naira’s exposure to a strengthening US dollar.
Following an improvement in the supply of dollars to banks, demand pressures subsided, and the naira held steady at ₦1,585 in the parallel market.
