Naira Exchange Rate Little Changed Amidst CBN’s Key Actions
The naira exchange rate was little changed week on week in the currency market amidst twin key actions taken by the Central Bank of Nigeria (CBN). In the foreign exchange market, the naira saw a slight improvement at the official window, gaining 0.01% week-on-week to close at N1,533.56 per US dollar demand logged by corporate FX users.
The CBN updated spot rate data on its platform confirmed the spot rate closed at N1,533.56/USD from N1,533.73 at the beginning of the week, supported by the CBN’s end-of-week announcement of clearing all outstanding FX forwards.
A slew of analysts who spoke with MarketForces Africa said the FX forwards clear will further boost foreign investors, market confidence, and strengthening supply outlook amidst growing external reserves. This modest 17 kobo appreciation came despite the strength of the US dollar and falling oil prices amid the announcement of a potential supply hike by OPEC+.
However, the story was different in the parallel market, where the naira depreciated by 0.52% week-on-week to close at an average of N1,545/$1, analysts at Cowry Asset Limited said in a note. The investment banking firm told investors in its note that this decline was driven by a surge in FX demand, as businesses and individuals sought dollars amid illiquidity.
Cordros Capital Limited revealed in an update that the CBN conducted forex market interventions where it sold $150 million to authorised dealer banks, boosting the supply side and stemmed negative tide in the currency market.
Analysts at AIICO Capital Limited said they expect the current stability in the FX market to persist in the near term, supported by the CBN ongoing refinement of existing policies. This week, global oil prices marked their steepest weekly losses since late June as markets awaits the meeting between President Trump and President Putin in coming days.
Crude oil prices took a significant hit over the week, with Brent crude falling more than 4% to settle at $66.8 per barrel, while the US benchmark WTI dropped 4.6% to $64.1 per barrel. The downturn was driven by a slew of bearish factors, including OPEC+’s announcement of increased supply, rising trade frictions between major economies, a decline in US crude exports, and ongoing uncertainty regarding sanctions on Russian energy.
These events triggered widespread selling across energy markets, pushing crude futures to their lowest levels in nearly two months. Nigeria’s Bonny Light crude was not spared, declining by 3.28% to close at $70.74 per barrel amid weakened demand linked to global trade anxieties and the anticipated surge in OPEC+ supply.
On a positive note, Nigeria’s external reserves rose by 1.56% week-on-week to $40.16 billion, driven by improved inflows, which may provide some buffer against external shocks and currency volatility in the near term.
“In the coming week, the naira is expected to sustain the marginal gains recorded in recent sessions, supported by the Central Bank of Nigeria’s continued intervention in the foreign exchange market,” Cowry Asset Limited stated.
While global trade tensions and volatility in the oil market—particularly the recent downward trend in crude prices—pose potential headwinds, the apex bank’s efforts to inject liquidity and stabilize demand pressures should provide a buffer against sharp depreciation.
Although external factors may exert intermittent pressure, analysts at Cowry Asset Limited anticipate the naira to hold relatively steady, especially at the official window, barring any major shocks in global commodity or financial markets. #Naira Exchange Rate Little Changed Amidst CBN’s Key Actions FGN Bonds Yield Climbs Slightly to 19.48% on Thin Trading
