CBN Intervenes in Currency Market to Redirects NFEM Rate
The foreign exchange market faced pressure due to increased demand for US dollars this week, leading to the Central Bank of Nigeria (CBN) injecting $80 million at the beginning of the week with additional FX sales on Friday.
The Apex Bank’s interventions have been crucial in stabilizing the naira exchange rate, preventing further depreciation in the absence of US dollar injections. The FX market experienced a mixed but relatively stable week, shaped by intermittent CBN interventions and shifts in dollar liquidity, analysts at AIICO Capital Limited said.
At the beginning of the week, the CBN sold $80 million, which analysts noted helped stabilize the market within the N1527.05–1530.70 range. Transaction at the Nigerian foreign exchange market (NFEM) was relatively quiet by midweek, with balanced flows and no CBN action required, with spot FX rates settling at N1527 and N1532.50.
However, by Thursday, demand for dollars increased amid tighter supply, pushing rates to highs of N1536 per dollar in the FX market. In its note, AIICO Capital Limited revealed that the CBN re-entered on Friday to ease pressure, resulting in improved liquidity.
The week closed with trades ranging from N1528.00 to N1536.50. The naira depreciated slightly by 13.6 bps week on week to close at N1,532.3405. The naira will likely hold its current range amid better liquidity, while markets weigh potential FX impacts from next week’s MPC decision, the investment firm said.
Elsewhere, crude oil prices were mostly steady on Friday as markets weighed mixed signals from U.S. economic data, trade tensions, and fresh EU sanctions on Russia over the war in Ukraine.
Brent crude slipped 24 cents to close at $69.28 per barrel, while U.S. West Texas Intermediate dropped 20 cents to settle at $67.34.
Gold prices rose, supported by a weaker U.S. dollar and persistent global uncertainty, which lifted demand for the safe-haven asset. Spot gold gained 0.4% to $3,351.18 per ounce, recovering some ground after a 1.1% decline the previous day.
Platinum prices, however, eased after touching 2014 highs. The planned retaliatory tariffs and new sectoral taxes may drive U.S. tariff rates beyond 25% – exceeding 1930s levels. These measures will likely fuel inflation in the coming months. #CBN Intervenes in Currency Market to Redirects NFEM Rate Euro Slides to $1.16 on EU Diplomatic Reaction to US Tariff
