CBN Injects $300 Million into Forex Market
The Central Bank of Nigeria (CBN) increased its intervention in the forex market during the week by injecting an $300 million to reduce the naira’s all-week negative fluctuations.
The amount included an initial injection of $200 million on Tuesday, aimed at redirecting the spot rate at the official window. The action failed as the naira spot rate dipped successively.
The CBN intervened again on Wednesday, selling an additional $100 million to ease pressure on the local currency amid rising demand for foreign payments.
However, the naira’s depreciation persisted, as it has now declined for 12 consecutive trading sessions. Earlier in February, the naira had appreciated modestly against the U.S. dollar (USD), with the Nigerian Foreign Exchange Market rate rising by 1.94% from 1,386.55/$ to close at 1,359.82/$.
In the parallel market, the naira appreciated by 5.14%, moving from 1,460.00/$ to close at 1,385.00/$. Stability was observed in the early part of the month, driven by improved FX liquidity from foreign portfolio investors (FPIs), local market participants, and the CBN’s approval of $150,000 weekly FX sales to Bureau De Change (BDCs).
AIICO Capital, in a report, indicated that it expects the naira to remain volatile but broadly stable, with a potential for modest appreciation in March.
Analysts at the investment firm cited robust external reserves and expectations of sustained high crude oil prices as supporting factors, alongside ongoing monetary and fiscal reforms aimed at boosting foreign inflows.
However, they also noted that external shocks, such as the U.S. and Israel’s attack on Iran, are expected to limit FPI inflows and pose a downside risk. Nigerian Naira Dives for 12-Day over Surging Offshore Payments
