Naira Softens, CBN Intervenes with $364m in 6-Day
Despite six consecutive FX sales to banks totalling $364 million, the naira slumped further in the official market as demand pressures persisted. Spot FX data computed based on FMDQ Exchange FX closing rate using data from Bloomberg BMatch indicated that the naira declined by 0.01% in the official window, closing at N1,552.58 per US dollar.
The Central Bank of Nigeria (CBN) has continued to throw its weight behind the local currency, though the exchange rate remained downbeat, sliding to N1552 in the official window after a positive to close to year 2024.
The exchange rate has been feeling the January effects with surging demand from local and corporate entities for foreign payments. The informal currency market has provided little supply to stem the tide against worsening exchange rate amidst unstable FX supply, driven by tighter regulation.
In the parallel market on Wednesday, the naira improved as the Bureau de Change and local banks began to compete for customers seeking to purchase US dollars for personal or business travel allowance. The spot rate in the official FX market has faced significant pressures but hasn’t loosen up sharply against the US dollar dominant in the currency market.
Daily slide has been limited, a development aided by the CBN intervention stance, though analysts are of the view that the magnitude of FX sales to banks would be unable to redirect exchange rate.
Even while losing its strength against the US dollar, the naira has remained relatively range-bound in the FX market. Latest data showed FX inflows into the official market grew by 125% week on week.
Last week, the Nigerian Autonomous Foreign Exchange window recorded an inflow of US$651.30 million, up by 125% from US$289.10 million in the previous week.
According to Coronation Research, the Central Bank of Nigeria accounted for 13.54% of the total inflow in the market last week. Details revealed that foreign portfolio investors contributed 28.96% of the total US dollar volume, while non-bank corporates accounted for 23.27% of the aggregate supply.
Exporters contributed 27.77% to the FX inflows, while other sources accounted for the remaining 6.46%. It was a mixed outing in the foreign currency market on Wednesday. While the naira lost ₦0.20 to close at N1,552.58, the local currency rally in the parallel market gained ₦10.00 to close at N1,660.
Consequently, the spread between the two markets narrowed to 6.92% from 7.55%, TrustBanc Financial Group Limited said in a note.
The investment firm reported that the CBN intervened in the FX market for the sixth consecutive session, selling $12.35 million to banks between the rate of ₦1,548/$ – ₦1,550/$. On Monday, the CBN sold $22 million to banks between the rate of ₦1,545/$ – ₦1,549/$.
Last week, FX intervention sales were conducted four times; total FX sold was $329.6 million. In the global commodity market, oil prices remained close to a one-week low as the market evaluated the potential impact of U.S. President Donald Trump’s proposed tariffs on global economic growth and energy demand.
Brent crude was priced at $79.10 per barrel, while West Texas Intermediate (WTI) was approximately $75.58. In contrast, gold prices surged to near three-month highs, trading just below their record peak.
This increase was driven by a soft dollar and uncertainties regarding U.S. President Trump’s policy plans, which have raised concerns among investors about the possibility of trade wars and heightened market volatility. Gold was valued at approximately $2,758.90 per ounce. Naira Plunges as Banks Resume FX Sales to Customers
