Nigeria: CBN Strengthens Nigerian Naira With $37 Million FX Market Intervention

The Central Bank of Nigeria (CBN) has injected an additional $37 million into the foreign exchange (FX) market, purchasing the equivalent amount in naira from banks. This strategic intervention aims to bolster liquidity and stabilize the naira amidst persistent exchange rate pressures.

Despite continued interventions by the CBN, the outlook for the naira in 2025 remains uncertain. Analysts from various investment banks maintain a bearish stance, projecting further currency depreciation, albeit cautiously due to potential mitigating factors such as the expected overhaul of Nigeria’s refineries. The refinery upgrades are anticipated to curb imported inflation, offering some respite to the economy.

In its latest market intervention on Tuesday, the CBN sold $37.1 million within a price range of N1,530 to N1,540 per US dollar. This move is part of the apex bank’s aggressive strategy to counteract negative exchange rate trends. Following the intervention, the naira settled at N1,538.50 in the official market. Preliminary data from pre-New Year trading indicated improved liquidity and relative stability in the FX market, with transactions occurring between N1,520.00 and N1,550 per dollar. Overall, the naira appreciated by 13 basis points, closing at N1,535.00 per dollar on Tuesday.

Meanwhile, Nigeria’s external reserves recorded an uptick, reaching approximately $40.9 billion, according to CBN data. This improvement provides a buffer to support further interventions if necessary.

Global market dynamics also played a role in shaping economic outlooks. Oil prices rose by about 2% as markets reopened for the New Year, buoyed by optimism about China’s economic recovery and increased fuel demand following President Xi Jinping’s commitment to stimulate growth. Brent crude was priced at $76.11 per barrel, while the US benchmark, West Texas Intermediate (WTI), stood at $73.34.

Additionally, gold prices surged to a two-week high, driven by safe-haven demand. Investors repositioned ahead of the Federal Reserve’s upcoming interest rate announcements and potential trade tariffs from President-elect Donald Trump. Gold was trading at approximately $2,654.94 per ounce.

The CBN’s proactive measures, coupled with global market trends, highlight the interconnectedness of local and international economic factors influencing the Nigerian economy. The central bank’s sustained interventions underscore its commitment to maintaining stability and addressing challenges in the FX market