CBN Intervenes in Nigerian FX Market with $50 Million
The Central Bank of Nigeria (CBN) intervened in the forex market to calm rising US dollar demand pressures on the local currency, the naira, exchange rate.
The Apex Bank pumped $50 million into the official window as FX inflows declined again by 14% last week to about $900 million. It had previously fallen from $1.37 billion the previous day.
Despite the solid intervention, the naira still lost N15 week on week, even with the reported inflows from exporters, non-bank corporate, individuals and other market players.
An updated FX report from the CBN showed that the Naira snapped its two-week appreciation streak, as the official exchange rate depreciated by 1.03% week on week to close at N1,436.58/US$1.
The naira is expected to remain stable in the near term, supported by steady foreign exchange inflows and improving market sentiment.
Similarly, the parallel market rate weakened by 1.71%, settling at N1,465.00/US$1. Consequently, the premium between the official and parallel market rates widened to N28.42/US$1, from N18.27/US$1 in the prior week.
Stronger non-oil export earnings, increased investor participation, and healthy external reserves are likely to sustain liquidity and bolster confidence in the currency
FX inflows through the official window moderated to US$899.20 million, compared to US$1.04 billion in the previous week, Coronation Merchant Bank’s research subsidiary said in a note.
The merchant lender’s research unit reported that foreign portfolio investors (FPIs) remained the dominant contributors, accounting for 60.13% or US$540.70 million of total inflows.
The segment was followed by Non-Bank Corporates (13.99%), Individuals (12.75%), and Exporters (12.56%), while other sources contributed 0.56%.
On the reserves front, gross external reserves rose marginally by 0.29%, or US$127.10 million week on week to US$43.32 billion , supported by stronger recorded inflows of +US$899.20 million and relatively lower outflows of –US$822.60 million.
FX analysts said the Naira is expected to remain below the N1,500/US$1 mark, supported by steady foreign portfolio inflows into the fixed-income market and improved market liquidity. Nigeria’s Oil, Gas Income Declines by 43% to N1.8trn
