Naira Halts Momentum as Nigeria’s FX Treasury Decline
The naira pulled back in the forex market on Friday due to sharp demand for US dollars at the Nigeria foreign exchange market for payments.
According to data obtained from the Central Bank, the exchange rate depreciated by N10 to N1549.35 in the official window from N1539.72 at the previous close.
The forex market experienced some sort of US dollar demand shock after 9 days of gaining streaks against the greenback. The Central Bank spent $580 million to defend the naira last month, and there were inflows from other sources, including exporters’ supply.
Some international oil companies’ dollar flows also added strength to average daily FX inflows, while the CBN played a key role in directing the spot rate with FX intervention.
But the external reserves accretion has eased, with the gross balance in Nigeria’s US dollar treasury settling at $38.33 billion amidst uncertainties in the oil market.
Data, however, showed that Bonny Light crude commanded a premium during the period, fueled by strong demand for Nigeria’s light sweet crude amid global supply chain complexities and geopolitical uncertainties. The premium reflected both the quality characteristics of Nigerian crude and the broader market dynamics affecting global oil trade patterns.
Nigeria’s crude is expected to climb sharply as oil prices increased sharply on Friday after Israel struck Iran amidst nuclear discussions with the US.
Bonny Light crude recorded a 1.31% increase month on month in May 2025, settling at $65.73 per barrel, while maintaining an average price of $65.90 per barrel over the period.
FX Treasury, or Nigeria’s foreign reserves, dropped further to $38.020 billion at the last check on Friday following a series of outflows that supported the CBN FX intervention stance.
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