Nigeria: Naira Gains Ground Amid CBN Intervention and Renewed Foreign Portfolio Inflows

The Nigerian naira appreciated marginally at the official foreign exchange window last week, trading at ₦1,547/$, up from ₦1,549/$, bolstered by targeted interventions from the Central Bank of Nigeria (CBN) and renewed inflows from foreign portfolio investors (FPIs).

Analysts attributed the currency’s resilience to increased dollar liquidity provided by the CBN to ease pressure from corporate demand and to active participation by FPIs in the Open Market Operation (OMO) auction. According to a market note by Cordros Capital Limited, foreign investors injected capital to engage in the high-yielding OMO instruments offered by the CBN as part of its liquidity management strategy.

The apex bank conducted an OMO auction offering ₦600 billion across 155-day and 204-day tenors, which attracted total subscriptions of ₦1.14 trillion. Ultimately, ₦1.07 trillion was allotted, with stop rates clearing at 24.20% and 24.59%, respectively—signalling investor confidence in Nigeria’s monetary tightening measures.

Despite the 0.13% week-on-week appreciation at the official window, the parallel market saw a mild depreciation of the naira, closing at ₦1,585/$, reflecting persisting informal market volatility.

Market analysts at Cowry Asset Management and Cordros Capital expect the naira to remain relatively stable in the near term, anchored by continued CBN intervention and an uptick in forex supply as economic reforms take hold. However, they warned that geopolitical tensions—particularly rising hostilities in the Middle East—could pose downside risks due to their effect on global oil prices and financial market sentiment.

Oil Prices and Reserves: A Mixed Outlook

Rising crude oil prices in the last three weeks offer fiscal relief for Nigeria, whose economy is heavily dependent on oil revenues. However, the modest naira recovery coincided with a continued drawdown in the country’s external reserves, which dropped to $37.71 billion as of Thursday, according to CBN data.

Fiscal-Monetary Synergy in Focus

In a bid to consolidate macroeconomic gains, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, held a strategic meeting with CBN Governor Olayemi Cardoso to enhance alignment between fiscal and monetary policies. The meeting follows a slight decline in headline inflation to 22.97% in May, reflecting tentative success in price stability efforts.

According to a statement from the Federal Ministry of Finance, discussions focused on sustaining current momentum to reinforce investor confidence, ensure exchange rate stability, and drive private sector-led growth.

“This meeting underscores the Ministry’s commitment to collaborative economic management, signalling a renewed focus on driving sustainable growth and development in Nigeria,” the statement read.