CBN Defends Naira with $61 Million FX Sales to Banks
The Nigerian foreign exchange market experienced a liquidity boost from the Central Bank (CBN) following a surge in US dollar demand logged by eligible market participants during the just concluded week.
The fx injection has reduced sharply in the current month as against the experience witnessed in the forex market in May. The naira has enjoyed relative stability even with low US dollar volume from the CBN.
The market experienced a mild shock as US dollar volume demanded increased, but the CBN came forth quickly. Hence, the naira appreciated by 12.8 basis points week on week to close at ₦1,547.36/$, supported by improved FX supply from foreign portfolio investors, exporters, and a notable oil-sector corporate.
The early OMO auction announcement attracted offshore interest, while CBN’s $61 million intervention midweek helped ease forex demand pressure at the official window, AIICO Capital Limited said in a note.
Daily trades ranged between ₦1,541 and ₦1,556/$, with the fixing adjusting accordingly, closing at ₦1,554.17 on Thursday. Despite increased FX demand, analysts said the interbank market remained balanced, requiring minimal CBN action.
The exchange rate is expected to remain strong as market participants anticipate further FX inflows from oil exporters in the coming week.
Latest data showed that Nigeria’s external reserves dipped by $219.56 million to $37.71 billion. The naira is likely to maintain its current trading range, supported by liquidity injections from oil exporters and the CBN, AIICO Capital Limited said.
Oil prices declined on Friday as the U.S. announced new sanctions targeting Iran, signaling a diplomatic route that raised hopes for a negotiated resolution. This came after President Donald Trump indicated he would take about two weeks to decide on potential U.S. involvement in the Israel-Iran conflict.
Brent crude futures dropped $1.84, or 2.33%, to $77.01 per barrel. U.S. West Texas Intermediate (WTI) crude for July, which expires Friday, fell 21 cents, or 0.28%, to $74.93.
Gold prices were steady, though poised for a weekly loss, with spot gold little changed at $3,368.68 an ounce, its lowest since June 12, and down 1.8% for the week. “While direct supply disruptions haven’t materialized yet, Middle East tensions keep risks elevated, particularly given potential U.S. involvement.
“The ongoing Israel-Iran conflict raises the likelihood of accidental escalation that could damage oil infrastructure. Ultimately, price direction will hinge on whether actual supply interruptions occur”, analysts said. #CBN Defends Naira with $61 Million FX Sales to Banks CIIN Launches Insurance Week to Boost Awareness
