Nigeria: CBN Intervenes in FX Market to Moderate Naira Appreciation

The Central Bank of Nigeria (CBN) moved to temper the recent appreciation of the naira, purchasing approximately $190 million from the foreign exchange market last week to absorb excess dollar supply.

The intervention followed a period of rapid gains by the local currency at the official window. Although the naira had strengthened consistently in preceding sessions, it retreated during the final three trading days of the week.

Market analysts had cautioned that sustained and sharp appreciation could trigger portfolio adjustments by foreign investors in Nigeria’s fixed-income market. A wave of exits, they warned, could heighten dollar demand, reverse currency gains, and exert renewed pressure on external reserves.

In response, the CBN reportedly resumed dollar purchases for the first time in an extended period, signalling a strategy aimed at moderating volatility rather than allowing unchecked currency appreciation.

According to TrustBanc Financial Group Limited, the apex bank acquired $189.80 million to stabilise the market and manage liquidity dynamics. The firm noted that the naira strengthened across both the official and parallel market segments during the week.

At the official window, the currency appreciated by N9.09 week-on-week to close at N1,346.32 per dollar, while the parallel market recorded a stronger gain of N60.00 to N1,340 per dollar.

TrustBanc also reported a sharp narrowing of the FX spread to 0.47 per cent from 3.29 per cent in the previous week, indicating improved convergence between both market segments.

Analysts attribute the broader currency stability to firmer global oil prices, rising external reserves, and reform-driven capital inflows, though they caution that geopolitical risks remain a factor in shaping near-term FX market dynamics.