Naira Rises to N1,510 after $181mn FX Sales to Banks
The naira rose moderately against the US dollar to settle at N1,510 following Central Bank of Nigeria’s (CBN) FX sales to banks totaling $181 million. According to FX spot data obtained from the FMDQ platform, the naira appreciated by 0.15% in the official window, closing at ₦1,510.33 per US dollar.
The positive exchange rate movement suggests favourable condition in the forex market backed by improved US dollar supply. On Friday, the Central Bank of Nigeria (CBN) intervened in the forex market, selling $114.8 million between the rate of ₦1,497.00/$1 – ₦1,503.00/$1 on Friday.
This brought to total foreign currency sales to authorised dealer banks for the week to $181.25 million amidst slowdown in the amount available to settle FX transactions demand.
The naira has been relatively stable in the NFEM market, primarily supported by improved FX liquidity from both FPIs and the CBN, despite still strong FX demand.
Analysts at Cordros Capital Limited said the adoption of the Electronic Foreign Exchange System (EFEMS) helped tamed excess naira volatility through increased market transparency.
FX Inflows Spikes 53% to $4.74bn
According to the data obtained from FMDQ, total inflows into the NFEM surged by 53.3% to $4.74 billion in January from $3.09 billion in December, 2024.
The surge was driven by higher contributions from both foreign and domestic sources. Foreign inflows rose substantially by 192.1% in January to $2.31 billion from $790.30 million – the highest level in 23 months.
The upbeat FX amount in the supply side driven mainly by higher foreign portfolio investors’ inflows.
Nigeria’s foreign exchange inflows surged by +213.0% in January due to stronger market confidence and high carry trade opportunities, Cordros Capital Limited said in a report.
Meanwhile, inflows from other corporates and foreign direct investment (FDI) declined. Specifically, corporates inflows declined by 45.5% in January as against the amount seen in December, 2024.
Also, US dollar inflows from foreign direct investors plunged by 35.5% month on month. Local FX inflows rose by 5.6% to $2.43 billion from $2.30 billion in Dec., driven by higher contributions from individuals, exporters/importers, and CBN, despite a decline in non-bank corporate inflows.
Due to the FX improvement, the naira appreciated by 4.3% in January, reaching N1,474.78 per US dollar as of 31 January from N1,538.25 in Dec 2024. As the CBN FX intervention heated up, the nation’s foreign reserves fell successively in February.
The external reserves fell 4.5% from the beginning of the year to $39.04 billion this week, reflecting increased CBN market interventions and external debt service payments. #Naira Rises to N1,510 after $181mn FX Sales to Banks#
