Central Bank Defends Naira with $360m in 5-Day
The exchange rate stabilised in the FX market as the Central Bank of Nigeria, CBN, defended the local currency with $360 million, stemming a negative tide from increased demand for the US dollar.
For most part of the week, the naira experienced heightened volatility due to an FX liquidity shortage in the official window, brought forward from the previous week. This caused the exchange rate to wobble against the US dollar, but late picked up as inflows into the market improved.
On Friday, the naira rebounded against the dominant foreign currency, the US dollar, in last-minute transactions supported by a relatively higher liquidity supply by the monetary authority. The exchange rate appreciated by about 2% to settle at N1,517.93 in the official market on Friday after persistent negative volatile.
Spot FX data from the regulator showed that the naira gained N29.89 on the day following FX sales to banks. The market liquidity was also supported by additional inflows from foreign sources and reduced demand for foreign payments.
FX interventions and inflows from offshore clients and local corporations boosted volume of US dollar in the official window, AIICO Capital Limited dropped the hint in an investors note.
In the market, demand pressure persisted, leading to fluctuations in the US dollar to naira exchange rate for most of the week. The CBN sold $188.10 million to banks, the last auction offered at the range of N1,532.00 to N1,540.00, bringing the total FX sales for the week to $360.00 million, according to investment banking firm TrustBanc Financial Group Limited.
Despite these interventions, demand outpaced supply, causing the naira to depreciate. By the end of the week, the market recorded improved liquidity, with trades ranging between N1,480 and N1,548.
Data from the CBN revealed that Nigeria’s external reserves increased by USD12.06 million to USD38.36 billion after 9 consecutive weeks of decline. In the forwards market, the naira rates decreased by 0.6% for a one-month contract to N1, 577.80.
The forward rate for a 3-month contract fell by -0.8% to N1,654.10. Also, FX forward rate for a 6-month contract declined by 0.7% to N1,764.98, while the 1-year dropped by -0.8% to N1,965.95.
In the global commodity market, oil prices recovered on Friday following a decline of over 1% in the previous session, as investors reassessed the likelihood of a swift resolution to the Ukraine conflict, which could increase Russian energy supplies to Western markets.
Brent crude rose 73 cents, or 1.04%, to $70.61 per barrel after falling 1.5% on Thursday. U.S. West Texas Intermediate crude climbed 72 cents, or 1.08%, to $67.27, following a 1.7% drop.
Meanwhile, gold surged past the $3,000 mark for the first time, driven by safe-haven demand amid economic uncertainty fuelled by President Trump’s tariff policies. Market data showed that spot gold reached a record of $3,004.86 before retreating 0.2% to $2,981.42 on Friday. Conoil Declines by 10% on One-off Sell Order
