CBN Sells $166m to Banks, FX Forward Contracts Depreciate
The naira remains on Central Bank of Nigeria’s (CBN) live support, with the authority selling $166 million to authorised dealer banks to stem overflow of US dollar demand at the official window in the week
The Nigerian FX market had a mixed yet relatively stable week, influenced by intermittent CBN FX interventions and fluctuations in dollar liquidity. The official FX spot rate settled at N1532.51 on Friday, gaining less than N1 week-on-week from N1533.56 at the beginning of the week.
The CBN sold about $166 million during the week, with the naira exchange rate fluctuating between a high and low of N1,526.00/$ and N1,536.50/$ at the NFEM before closing at N1,530.00.
In the forwards market, the naira rates depreciated across contracts, reflecting a mixed outlook about the local currency. The forward FX contract for one month depreciated by 0.1% to N1,577.15 per dollar. Also, the three-month FX forward contract declined by 0.3% to N1,652.88.
With investors hedging on 6-month, forward FX contracts depreciated by 0.5% to N1,764.11, and 1-year coverage dipped by 0.8% to N1,975.38 per dollar.Nigeria’s gross external reserves increased by approximately $565 million to $40.72 billion.
These suggest the market is still bearish about the naira outlook despite persistent FX interventions, which analysts think will not end given the fact that rising external reserves will give the authority additional support to keep the naira stable.
“In the interim, we expect the FX market to retain its current stability, supported by the Central Bank of Nigeria’s ongoing policy refinements and fiscal measures aimed at sustaining liquidity,” AIICO Capital Limited said.
In the global commodity market, crude oil prices were volatile during the week as traders awaited talks between U.S. President Donald Trump and President Vladimir Putin, which could potentially ease sanctions on Moscow over the war in Ukraine.
Brent crude slipped 41 cents to close at $66.18 per barrel, while U.S. West Texas Intermediate fell 71 cents to $63.17. Gold prices declined after hot inflation data reduced expectations for rate cuts, with market attention turning to the upcoming U.S.–Russia talks.
Spot gold fell 1.82% to $3,337.02 per ounce, traders said in reports. Next week, commodity prices are expected to remain volatile, with oil likely trading sideways to lower on oversupply unless the Trump–Putin summit sparks fresh geopolitical risk, while gold could face downside if peace prospects rise but stay supported by Fed policy and macro uncertainty. #CBN Sells $166m to Banks, FX Forward Contracts Depreciate#
Banks Borrowings Increase as CBN FX Settlement Gulps Liquidity
