CBN injects $580 million to steady naira amid external reserve dip

DDM News

The Central Bank of Nigeria (CBN) has intensified its intervention in the foreign exchange market to stabilize the weakening naira.

Diaspora Digital Media (DDM) reports that in May 2025 alone, the apex bank injected $580 million into the FX market to defend the local currency.

This intervention came as Nigeria’s external reserves dropped to $38.045 billion, raising concerns about long-term reserve sustainability.

The CBN’s aggressive FX support followed increased dollar demand by corporations settling international transactions.

By supplying foreign exchange through authorized dealer banks, the CBN aimed to improve market liquidity and stabilize currency volatility.

Analysts noted that the naira’s performance in May showed signs of resilience, supported by sustained FX inflows and tighter monetary policy.

AIICO Capital Limited observed that despite downward pressures, the naira maintained a relatively steady range throughout the month.

Earlier in May, the naira weakened to an intraday low of ₦1,614 per dollar amid global oil price dips and higher FX demand.

CBN’s multi-session dollar injections helped curb the depreciation trend, allowing the naira to find short-term support.

In addition to central bank efforts, inflows from exporters and returning interest from foreign portfolio investors boosted FX supply.

These positive developments were reinforced by Nigeria’s credit rating upgrade from Moody’s Investors Service.

Moody’s elevated Nigeria’s sovereign rating from Caa1 to B3, citing ongoing reforms and stronger macroeconomic indicators.

The improved outlook marked the second upgrade under President Bola Ahmed Tinubu’s administration, signaling policy progress.

Moody’s also raised Nigeria’s local currency ceiling to Ba3 and its foreign currency ceiling to B2.

The agency attributed its decision to the removal of fuel subsidies, greater FX flexibility, and enhanced revenue mobilization.

These fiscal and structural reforms have reduced key vulnerabilities and improved Nigeria’s external financing position.

Throughout May, the naira fluctuated within a range of ₦1,575 to ₦1,610 per dollar on official markets.

AIICO Capital reported that by month-end, the currency appreciated by 66 basis points, settling at ₦1,586.15/USD.

Conversely, the parallel market saw mild depreciation, with the rate slipping to ₦1,617.50/USD due to sustained demand.

Despite occasional spikes in dollar demand, analysts say investor confidence in the FX market has improved.

Liquidity remains robust, and the CBN’s interventions have helped anchor expectations around naira stability.

Tighter monetary controls and better FX reserve management have contributed to growing market resilience.

Another milestone was Nigeria’s full repayment of its debt to the International Monetary Fund (IMF).

The debt, originally pegged at $3.54 billion in December 2020, was fully settled by May 2025.

This repayment removes Nigeria from the IMF debtor list and signals stronger fiscal discipline under the current administration.

Economists view the move as a boost for Nigeria’s creditworthiness and a step toward restoring global investor trust.

The settlement also reflects a commitment to macroeconomic stability and self-reliant fiscal policies.

With external reserves under pressure and FX needs rising, analysts warn that future interventions must be carefully balanced.

They caution that while CBN’s actions offer short-term relief, sustainable solutions require broader economic diversification and export growth.

The naira’s performance in the coming months will depend on oil price trends, capital inflows, and global financial conditions.

DDM will continue to monitor policy directions, FX market reactions, and broader economic developments affecting Nigeria’s currency stability.

For Diaspora Digital Media Updates click on Whatsapp, or Telegram. For eyewitness accounts/ reports/ articles, write to: citizenreports@diasporadigitalmedia.com. Follow us on X (Fomerly Twitter) or Facebook