CBN Injects about $2.5bn in FX Market to Defend Naira in April
In April, the naira survived fast and furious pressures in the foreign exchange market primarily on the Central Bank of Nigeria’s (CBN) successive foreign currency intervention sales to authorised dealer banks. Demand for dollars spiked due to a raft of flight-to-safety actions that caused increased demand for the greenback for upstreaming abroad.
Still, the local currency remains on the CBN FX intervention support. The authority became aggressive with FX sales due to offshore investors’ rush to exit naira positions, which caused increased demand for US dollars.
The naira lost 3.90% of its open value in April despite about $2.5 billion in FX injections by the monetary authority to keep the exchange rate stable. The Nigerian foreign exchange market was defined by sustained volatility and pronounced naira depreciation amid persistent demand pressures and constrained dollar supply.
The month opened with the naira hovering between N1,525 and N1,535, buoyed by the Central Bank’s FX support and moderate offshore inflows. But a mid-month surge in offshore demand and softer oil prices drove interbank rates to as weak as N1,570 per greenback. Across four weeks, the CBN injected over $2.48 billion into the market.
According to AIICO Capital Limited, the CBN sold about $634.9 million, $280 million, $197.7 million, and $116 million in successive weeks—while oil and gas exporter inflows contributed an additional $1.31 billion.
Analysts said these interventions narrowed bid-offer spreads to N2–N3 and briefly tempered volatility, even as the NAFEX fixing swung between N1,616.63 and N1,643.33. Despite these efforts, the naira lost 3.90% m/m, closing at N1,596.69; the parallel market settled at N1,606.50. External reserves declined by about $370 million to $37.93 billion.
In a macro update, Verto said the bid for Non-deliverable Forward (NDFs) caused the Nigerian Autonomous Foreign Exchange Market (NAFEM) to drift back up to a touch above 1600, with Parallel running at a 0-2% spread.
“By all accounts, the CBN has continued to intervene daily to the tune of $50 million–$100 million, but the general consensus is that this is intended to simply keep supply trickling into NAFEM rather than materially holding the rate stable”.
In its latest drive to attract foreign inflows, the CBN has become more aggressive with OMO bill issuance at higher rates after Q1 slowdown.
Over the last three weeks, the market has seen three separate auctions that attracted a decent amount of bids, albeit with yields coming in about 100 bps above the secondary market; the auction was far from stellar.
Verto said in its macro updates that these fully cleared auctions ticked the boxes for controlling local liquidity without overcommitting to interest burden. #CBN Injects about $2.5bn in FX Market to Defend Naira in April Equities Investors Gain N412bn amidst Wobbling Banking Index
