CBN Mops Up Naira, Injects $200 Million as Local Currency Rebounds in Official Market
- Central Bank of Nigeria injects $200 million to stabilise the naira amid heightened dollar demand
- Naira shows signs of recovery after consecutive trading gains following CBN's intervention
- Market sentiment improves as additional dollar liquidity boosts forex supply and eases panic demand
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s local currency has shown fresh signs of recovery after the Central Bank of Nigeria (CBN) injected about $200 million into the foreign exchange market in a renewed push to stabilise the naira.
The intervention comes after two weeks of sustained pressure on the currency, which had weakened due to a surge in demand for the US dollar for offshore payments and other foreign obligations.
Source: Getty Images
Market data suggests the central bank’s latest move has begun to ease pressure on the naira, helping the local currency post gains for several consecutive trading sessions.
Fresh intervention to calm the FX market
The CBN stepped up its presence in the foreign exchange market at the beginning of the week, selling $200 million in naira equivalent to improve dollar liquidity and calm volatility in the official market.
The intervention follows a much larger $500 million FX sale last week, signalling a more aggressive stance by the monetary authority to defend the naira and prevent excessive fluctuations.
Analysts say the strategy reflects the central bank’s commitment to maintaining stability within the managed band at the official window while ensuring adequate liquidity for legitimate market demand.
The renewed action also comes amid heightened demand for foreign exchange by importers and companies making offshore payments, which had previously weighed heavily on the local currency.
Naira gains momentum after weeks of pressure
Following the intervention, the naira has begun to strengthen in the official market, reversing part of the losses recorded in recent weeks.
Daily foreign exchange data shows that the currency opened the week around N1,405 per dollar but appreciated to about N1,376 at the close of trading, reflecting improved market sentiment and stronger FX supply, according to a report by MarketForces Africa.
This marks three consecutive sessions of gains, a signal that the central bank’s liquidity injections are beginning to influence the market.
Currency traders say the improved supply of dollars has helped ease panic demand and restore some confidence among market participants.
Multiple sources boost FX liquidity
Beyond the central bank’s intervention, the foreign exchange market has also benefited from inflows from several other sources.
Foreign portfolio investors, exporters, and non-bank corporates have contributed additional dollar liquidity to the system, helping to support the naira’s rebound.
A Vanguard report revealed that these inflows have played a critical role in boosting supply at the official market window, which has faced persistent demand pressure since the start of the year.
Market watchers say sustained inflows from these channels could provide further support for the naira if the trend continues in the coming weeks.
Outlook for the naira
Despite the recent gains, analysts caution that the foreign exchange market remains sensitive to demand pressures, particularly from importers and companies with foreign obligations.
However, the CBN’s continued willingness to intervene, combined with improving FX inflows, may help maintain relative stability in the short term.
Source: Getty Images
For now, the latest intervention appears to have delivered immediate results, offering temporary relief to the naira after weeks of volatility in Nigeria’s currency market.
Black market traders announce new dollar price
Legit.ng earlier reported that Nigeria’s currency suffered a fresh setback on Thursday as the naira weakened by N25 in a single trading session at the parallel market, reflecting renewed demand pressure for the US dollar.
Information gathered from street traders and online foreign exchange tracking platforms showed the naira trading between N1,410 and N1,420 per dollar across several black-market hubs nationwide.
At the upper band of N1,420/$, the local currency has depreciated by about 1.8 per cent compared with N1,395/$ quoted on Wednesday, highlighting a sudden reversal after weeks of gradual strengthening.
Source: Legit.ng
