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The Nigerian naira recorded a modest gain against the US dollar in local currency markets, following a temporary halt in foreign exchange (FX) interventions by the Central Bank of Nigeria (CBN). The apex bank’s aggressive FX sales to authorized dealer banks and Open Market Operation (OMO) bills—open to foreign investor participation—have been key drivers of market liquidity.
Recent data showed that the naira traded at N1,500 per dollar in the official market, reflecting a week-on-week gain of 93 kobo as the CBN withheld FX interventions for five consecutive days. Similarly, in the parallel market, the naira appreciated to N1,505 per dollar, gaining N10 within the same period. The narrowing FX spread between the official and parallel markets, now at just N5 per dollar, signals improved market efficiency.
The introduction of the Bloomberg BMatch electronic trading platform on December 2 has significantly enhanced transparency and liquidity, stabilizing the naira despite early-year demand pressures. In February, the naira depreciated by 1.69% in the official market but gained 7.33% in the parallel market, bringing its year-to-date appreciation to 2.48% and 9.67%, respectively, according to TrustBanc Financial Group Limited.
However, concerns persist regarding FX market transparency. Global cross-border payments platform Verto noted that turnover figures on Bloomberg BMatch remain unpublished, leaving authorized dealers as the only participants with full visibility into the Electronic Foreign Exchange Market System (EFEMS) and its liquidity flows.
Meanwhile, Nigeria’s gross external reserves have declined to $39.10 billion, largely attributed to CBN’s FX interventions. Analysts warn that continuous depletion of reserves to support FX liquidity could pose long-term risks. Questions have also emerged about the accuracy of Nigeria’s reported foreign reserve figures, especially with speculation surrounding the NNPC’s FX backlog.
Despite recent naira stability—trading around ₦1,500/$ after falling to ₦1,900/$ at its weakest—market observers remain divided. While some view this as a positive outcome of CBN’s intervention strategies, skeptics argue that the currency’s long-term strength is far from assured. Speculative hoarding remains a significant challenge, with hedgers and policymakers closely monitoring any signs of renewed volatility.
TrustBanc Group emphasized that sustaining naira stability requires more than short-term interventions, advocating for deeper structural reforms to ensure lasting FX market resilience. The CBN maintains that FX inflows have been strong since the introduction of its automated trading platform, with increased foreign investor participation and remittance inflows boosting liquidity.
Additionally, Nigeria’s FX inflows have been bolstered by renewed bilateral agreements. At the end of 2024, China extended its FX swap deal with Nigeria for another three years. While the immediate impact may be limited, failure to renew the agreement could have had severe consequences, given that China remains Nigeria’s largest trading partner, accounting for nearly $15 billion in total trade.
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