Dollar Sells at High Rate as CBN Crashes Naira amid Interest Rate Cut
- The Central Bank of Nigeria withdraws $190 million to curb naira's rapid appreciation
- Meanwhile, Nigeria's external reserves surpass $50 billion, ensuring import financing for 9.68 months
- This has made analysts express concerns over foreign investor sentiment amid currency volatility
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The naira came under fresh pressure in the foreign exchange market after the Central Bank of Nigeria moved to curb its recent rally by mopping up dollars from the system.
CBN mops up $190 million
On Monday, February 23, 2026, the Central Bank of Nigeria intervened in the FX market, reportedly withdrawing about $190 million.
Source: Getty Images
The move was aimed at slowing the naira’s rapid appreciation, which had gathered pace in the preceding week, according to a report by The Nation.
The local currency had strengthened by more than three per cent within days, a development some market watchers believe could dampen foreign investor interest.
While a firmer currency often signals stability, sharp and sustained gains can unsettle portfolio investors who prefer predictable returns in a relatively weaker currency environment.
Naira reverses course at official window
According to reports, the naira had posted strong gains at the official market window before retreating in the final three trading sessions that ended Friday, February 20, 2026.
Following the apex bank’s intervention, the currency weakened further. At the close of trading on Tuesday, February 24, 2026, the naira fell to N1,355.3745 per dollar, down from N1,349.2352 recorded the previous day.
Data published by the central bank showed the decline came as demand outweighed supply, with traders scrambling for limited dollar liquidity in the market.
Analysts weigh in on currency strategy
Financial analyst and economist Osas Igho said the naira’s sharp rally may have created unease among foreign investors.
“Foreign investors are always uneasy in a market with a strong currency. The naira’s aggressive rally posed a threat to offshore investors,” he told Legit.ng on a call.
According to him, many offshore investors are more comfortable operating in a deregulated market where the currency is moderately devalued, as this can enhance returns when funds are repatriated.
A rapidly appreciating currency, he noted, could narrow profit margins and reduce the attractiveness of carry trades.
His comments reflect a broader debate about the right balance between currency stability and competitiveness, especially at a time when Nigeria is seeking to sustain foreign capital inflows.
External reserves cross $50 billion
Amid the currency volatility, the CBN announced that Nigeria’s external reserves have surpassed $50 billion.
The disclosure was made by CBN Governor Olayemi Cardoso during the Monetary Policy Committee meeting held in Abuja on Tuesday, February 24, 2026.
Cardoso said the current reserve level is enough to finance approximately 9.68 months of imports, a figure that underscores stronger external buffers and improved liquidity conditions, a BusinessDay report said.
He added that the central bank hopes to push the reserves to their highest level in 15 years in the near future.
Outlook for 2026
At the close of December 2025, the apex bank projected that Nigeria’s external reserves would rise to $51.04 billion in 2026.
The forecast was anchored on expectations of easing foreign exchange pressures, improved crude oil earnings, and sustained inflows from remittances and foreign portfolio investments.
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Naira hits three-year high as dollar hoarders sell off, Nigeria’s reserves climb to $48.5bn
Source: Getty Images
For now, market participants will be watching closely to see whether the central bank continues its intervention strategy or allows the naira to find a new equilibrium.
The coming weeks could prove crucial in determining the direction of the currency and investor sentiment in Africa’s largest economy.
CBN dollar sales to BDCs shrink naira gap to N65
Legit.ng earlier reported that the gap between Nigeria’s official and parallel foreign exchange markets narrowed further on Friday, February 13, 2025, signalling renewed convergence in the currency market after the Central Bank of Nigeria reopened dollar sales to Bureau De Change operators.
The spread between both segments tightened to N65, down from N92 on Wednesday, a 4.6 per cent contraction within two trading sessions.
The move came as BDC operators prepared to access fresh dollar supply from banks under the apex bank’s revised retail FX framework.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
