CBN Injects $950m into FX Market to Bridge Bank Liquidity Deficit
The Central Bank of Nigeria (CBN) sold $950 million to banks and other authorised dealers in the foreign exchange market last week to address the liquidity gap and strengthen the local currency.
Activity in the interbank FX market increased as market makers continued to bid for companies arranging seasonal imports and settling non-bank corporate FX liabilities.
The naira gained 1.14% last week, closing at ₦1,346.26/$ from ₦1,361.84, after the CBN sold about $950 million. The market saw a significant rise in demand for dollars, putting pressure on the local unit.
The latest FX sales marked the second week of FX intervention, driven by pre-season and election demand for the dominant US dollar.
FX analysts expect the CBN to keep defending the local unit to ensure exchange-rate gains do not disappear against the authority’s 2026 target.
The market has begun to see a shift in sentiment, with naira bulls slowly dissipating, though the naira’s fair value remained within N1300 and N1350.
In the parallel market, it lost 1.09%, to ₦1,385/$ from ₦1,370. The gap between the two markets widened to 2.88% from under 1%.
Against the pound and euro, the naira gained at the NAFEM (₦1,803.58 and ₦1,503.23) but weakened in the parallel market (₦1,815 and ₦1,525). Year to date, the naira is up 6.23% at the NAFEM.
“The official rate may stay steady, supported by CBN dollar sales, reserves above $55 billion and oil prices above $110. The wider gap could keep pressure on the parallel market, so watch whether it narrows”, AIICO Capital Limited said in its investors’ note.
Gold fell 2.42% to US$3,915.02/oz from US$4,012.27, as strong US inflation data raised expectations of tighter monetary policy.
Brent fell 2.12% to US$113.38/bbl from US$115.84, as peace mediation efforts eased supply worries. A Friday attack on a tanker in the Strait of Hormuz kept prices high.
Year to date, gold is down 10.15% while Brent is up 86.33%.
Excess Liquidity in Banking System Eases to N8.6trn, Rates Diverge
