…CBN injects $190.40m as naira strengthens across markets
By Chinwendu Obienyi
Nigeria’s foreign exchange (FX) reserves rose to a four-week high of $38.54 billion following a series of interventions by the Central Bank of Nigeria (CBN) aimed at stabilizing the naira and shoring up market confidence.
The reserves, which gained $166.63 million on a week-on-week (w/w) basis, have now posted gains for the fourth consecutive week.
The sustained improvement reflects a cautious return of confidence in the FX market and the CBN’s continued commitment to supporting the local currency through direct interventions and liquidity management.
Daily Sun learnt that the increase in FX reserves coincided with the CBN’s sale of approximately $190.40 million to the FX market during the week. This injection helped to stabilize market dynamics and provided a buffer against speculative pressures, leading to a modest appreciation of the naira.
In the official window, the naira appreciated by 1.1 per cent week-on-week to close at N1,585.00 per US dollar. This trend was mirrored in the forwards market, where the naira recorded gains across various tenors.
On the flipside, the naira depreciated by 0.8 per cent to close at N1,610/$1 in the parallel market. The 1-month forward contract rose by 1.1 percent to N1,623.11/$1, while the 3-month and 6-month contracts gained 1.5 per cent and 1.6 per cent to settle at N1,682.77/USD and N1,770.17/$1, respectively.
Similarly, the 1-year contract appreciated the most, climbing 2.6 per cent to N1,938.74/$1.
Currency analysts attribute the positive movement to a combination of the CBN’s active intervention and a temporary easing of global market pressures, especially those linked to trade tensions and capital flow disruptions.
Head, Research at FSL Securities, Victor Chiazor, said, “The recent FX interventions by the CBN appear to be yielding positive results, at least in the short term. Improved FX liquidity and a more responsive monetary stance have supported some naira appreciation, but the underlying challenges remain”.
Despite the upbeat movement, Chiazor cautioned that the outlook for the naira remains mixed. According to him, while short-term stability is likely to persist due to relatively subdued external pressures and the CBN’s liquidity support, there are concerns over the long-term sustainability of the current trend.
Specifically, subdued foreign portfolio inflows and lingering global uncertainty continue to weigh on FX liquidity.
For instance, foreign portfolio transactions on the Nigerian Exchange Limited (NGX) declined sharply by 90.99 per cent at the end of April, falling to N63.07 billion from N699.89 billion recorded in March, data from the latest Domestic and Foreign Portfolio Investment report released by the NGX.
The sharp drop in foreign participation followed a surge recorded in March due to large block of trades that significantly boosted foreign inflows. With the absence of such transactions in April, foreign investors activity slumped, accounting for just 13.08 per cent of total market turnover for the month.
Foreign investors remain cautious, awaiting clearer policy signals and improved macroeconomic fundamentals before returning to Nigeria’s financial markets in significant numbers.
“Without a strong rebound in capital inflows or export earnings, it will be difficult to sustain naira gains over the medium term and just as I have stated, the market remains fragile, and much will depend on how the authorities manage both fiscal and monetary expectations going forward”, Chiazor stated.
The CBN has recently intensified its FX market reforms, including increased transparency in pricing, curbing round-tripping, and streamlining FX access. These measures, combined with better coordination between fiscal and monetary authorities, are expected to enhance investor confidence and support long-term market stability.
For now, however, the naira’s modest appreciation and the rise in FX reserves offer a welcome respite in an otherwise turbulent macroeconomic environment.