Naira Strengthens after CBN Injects $96m into FX Market
The naira strengthened against the US dollar as data showed the Central Bank of Nigeria (CBN) injected more than $96 million into the official foreign exchange (FX) market last week.
The CBN FX interventions lifted the US dollar volume, supported by sustained foreign investors’ confidence in the official window. The US dollar volume rose due to CBN FX interventions, backed by ongoing foreign investors’ trust in the official channel.
The CBN figures show that the official window’s spot rate ended at N1529.71 per dollar on Monday, down from N1539.23 on Friday with no major demand pressures.
Last week, the naira strengthened by N8.13 against the US dollar at the Nigerian foreign exchange market, closing at N1,539.23/US$1. The continuous naira appreciation was supported by inflows from foreign portfolio investors (FPI) during the week, nonbank corporates and exporters.
Similarly, in the parallel market, the naira edged higher against the US dollar by 1.90%, closing at N1,575/US$1. Last week, FX inflows into the forex market reached US$1.03 billion, according to Coronation Research.
Foreign portfolio investors (FPIs) have, for the sixth week in a row, remained the main contributors, comprising 36.98% of the total, indicating continued foreign investor enthusiasm for the Nigerian fixed income market.
Non-bank businesses closely trailed at 27.56%, with exporters making up 22.39% and other sectors contributing 13.06%. In addition, Coronation Research noted a US$96.3 million inflow from the Apex Bank.
“We expect the naira to remain relatively stable in the near term, supported by continued foreign portfolio inflows and improved FX supply from non-bank corporates and exporters.
“However, the moderate decline in gross external reserves and the relatively modest FX inflow from the CBN suggest that the market may remain sensitive to demand-side pressures”, analysts at Coronation said.
There is also some concern about oil prices and production numbers and their effect on FX inflow from oil sales. Sustained investor interest in fixed income assets, if maintained, could help anchor sentiment, though further stability will hinge on the pace of reserve accretion and the central bank’s ongoing intervention strategy. #Naira Strengthens after CBN Injects $96m into FX Market
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