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In a bold effort to shield the Naira from further volatility, the Central Bank of Nigeria (CBN) intervened in the foreign exchange (FX) market with $669 million during the first quarter of 2025. This was revealed in a report by AIICO Capital Limited, highlighting the apex bank’s aggressive stance against mounting foreign exchange market pressures.
The interventions come amid declining U.S. dollar inflows and heightened offshore demand for foreign currency. To counter the widening gap between official and parallel market rates, the CBN mandated Bureau de Change (BDC) operators to purchase $25,000 from authorized dealer banks at the official rate, signaling a tactical shift toward enhancing market liquidity and exchange rate transparency.
However, these efforts coincided with a notable dip in Nigeria’s external reserves, which had previously reached a three-year high of $43 billion. Reserves fell sharply as a result of sustained FX market interventions and debt service obligations, closing the quarter at $38.31 billion—a key indicator of reduced buffer strength for future regulatory risk management.
Despite the CBN’s continued dollar sales, the naira experienced sharp depreciation due to persistent demand pressure in the Nigerian Foreign Exchange Market (NFEM). In March 2025 alone, the naira weakened by 2.97%, falling from ₦1,492.49/$ to ₦1,536.82/$, despite the CBN injecting $668.8 million into the market.
Market activity remained elevated, with strong FX demand from foreign portfolio investors (FPIs) and local corporate entities. The parallel market reflected similar depreciation, dropping by ₦43.50/$ to ₦1,536.00/$, even as CBN interventions temporarily improved mid-month liquidity.
In the final week of the quarter, although there was a marginal appreciation in basis points, the naira continued to face headwinds, underlining the pressure on the central bank to maintain regulatory oversight, currency stability, and compliance with monetary policy targets.
On a quarterly basis, the local currency depreciated across official channels, mirroring macroeconomic concerns about capital outflows, weak FPI inflows, and broader global economic risks, including U.S. tariffs and potential retaliatory trade actions. These dynamics are expected to keep the currency market volatile, posing challenges to regulatory compliance frameworks and monetary policy execution.
Analysts suggest that while short-term liquidity injections may offer temporary relief, sustaining Naira stability will require a comprehensive compliance management strategy, deeper regulatory intelligence, and policy coordination to bolster investor confidence and support long-term economic resilience.
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