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The naira appreciated to N1,537 per US dollar in the official foreign exchange market on Tuesday following the Central Bank of Nigeria’s (CBN) intervention through FX sales to authorized dealer banks.
Analysts predict further stabilization of the exchange rate due to the CBN’s consistent and strategic FX auctions to authorized dealers. To ensure stability across currency markets, the CBN extended support to Bureau de Change operators, allowing them to purchase US dollars from banks at the official rate.
This temporary measure aims to ease year-end demand pressures and curb speculative trading. Consequently, the exchange rate in the parallel market also strengthened, appreciating by N15 to close at N1,640 per US dollar on the same day.
Market analysts noted that the spread between the official and parallel markets narrowed by 91 basis points to 6.70% from 7.61%. On Monday, the CBN sold $40 million at rates ranging between N1,532 and N1,541 to authorized local banks.
This intervention followed a week of aggressive FX supply, with December seeing consistent FX auction sales. Analysts attribute this development to the CBN’s year-end objectives and the rise in Nigeria’s external reserves.
At the MarketForces Africa economic forum, experts highlighted that Nigeria’s robust external reserves provide a strong buffer for the CBN to stabilize the naira. They also noted that increased transparency on the automated FX trading platform has continued to attract inflows into the country.
Nigeria’s foreign reserves rose to $40.848 billion on Monday, reflecting growing confidence from foreign investors. This positive trend reinforces the CBN’s ability to maintain exchange rate stability and bolster economic resilience.
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