Nigeria: CBN Intervenes with $360M to Stabilize Naira Amid FX Volatility

The Central Bank of Nigeria (CBN) injected $360 million into the foreign exchange (FX) market over five days, curbing pressure on the naira and stabilizing its value against the U.S. dollar.

Throughout the week, the naira experienced significant volatility due to a persistent FX liquidity shortage carried over from the previous week. This led to fluctuations in the exchange rate; however, improved inflows later in the week helped the local currency recover.

By Friday, the naira appreciated by approximately 2%, closing at N1,517.93 in the official market following sustained depreciation earlier in the week. The turnaround was largely attributed to increased FX liquidity from the central bank’s interventions. Spot FX data from the CBN indicated that the naira gained N29.89 after FX sales to banks, with additional support from foreign inflows and decreased demand for foreign payments.

Market analysis by AIICO Capital Limited highlighted that offshore investors and local corporations contributed to the improved dollar supply in the official FX window. Despite this, demand pressures persisted, causing fluctuations in the exchange rate throughout the week.

FX Interventions and Market Liquidity

The CBN sold $188.10 million to banks, with the last auction pricing the dollar between N1,532.00 and N1,540.00. TrustBanc Financial Group Limited reported that total FX sales for the week amounted to $360 million.

Despite these interventions, demand still outpaced supply, leading to a volatile exchange rate. By the end of the week, market liquidity improved, with trading rates fluctuating between N1,480 and N1,548.

Meanwhile, Nigeria’s external reserves saw a marginal increase of $12.06 million, reaching $38.36 billion after nine consecutive weeks of decline.

FX Forward Market Performance

In the forwards market, the naira weakened across different contract tenors:

• 1-month contract: fell by 0.6% to N1,577.80
• 3-month contract: declined by 0.8% to N1,654.10
• 6-month contract: dropped by 0.7% to N1,764.98
• 1-year contract: depreciated by 0.8% to N1,965.95

Global Commodity Market Trends

On the international scene, oil prices rebounded on Friday after a 1% decline in the previous session. The uncertainty surrounding the Russia-Ukraine conflict and its impact on energy supplies contributed to the market’s volatility.

• Brent crude: rose $0.73 (1.04%) to $70.61 per barrel after a previous 1.5% drop.
• U.S. West Texas Intermediate (WTI) crude: increased $0.72 (1.08%) to $67.27 per barrel, following a 1.7% decline.

Gold prices surged past the $3,000 mark for the first time, driven by heightened demand for safe-haven assets amid economic uncertainty linked to U.S. trade policies. Spot gold hit a record $3,004.86 before retreating slightly to $2,981.42 on Friday.

Stock Market Movement

Meanwhile, Conoil’s stock declined by 10% following a one-off sell order, reflecting cautious investor sentiment amid ongoing market fluctuations.

With the CBN’s ongoing efforts to stabilize the naira and maintain liquidity, market participants remain watchful for further regulatory interventions in the FX space.