Naira gains as CBN injects $190m into forex market

DDM News

The Nigerian naira recorded a notable appreciation against the United States dollar last week.

This development follows the Central Bank of Nigeria’s (CBN) injection of $190.4 million into the foreign exchange market.

Diaspora Digital Media (DDM) gathered that the intervention targeted authorized dealer banks in a bid to boost liquidity and stabilize rates.

At the official market, the naira closed the week at ₦1,580.44 per dollar, reflecting a 1.14% gain.

Analysts attributed this appreciation to improved forex supply and subdued demand for the dollar.

Lagos-based AIICO Capital noted that the exchange rate hovered between ₦1,575 and ₦1,610 throughout the week.

The NAFEX fixing rate also improved, falling from ₦1,602.38 to ₦1,580.44 as trading progressed.

Market activity received a midweek boost from foreign investor inflows, which added momentum to the currency’s recovery.

By the week’s end, exporters also contributed to the rising supply of foreign exchange.

Fresh data from the CBN revealed that Nigeria’s external reserves climbed by $182.79 million.

This increase brought the total reserve figure to $38.56 billion, supported by undisclosed financial inflows.

Despite the gain, analysts warned that liquidity remains constrained, and foreign portfolio investments remain limited.

Still, short-term stability in the exchange rate is expected, largely due to the CBN’s consistent interventions.

In the forwards market, naira futures appreciated across all tenors:

Each contract showed signs of renewed investor confidence in the local currency.

The 1-month forward rate settled at ₦1,623.11, marking a 1.1% increase.

The 3-month tenor rose to ₦1,682.77, reflecting a 1.5% gain.

Six-month forward contracts improved by 1.6% to reach ₦1,770.17.

The 1-year forward rate climbed to ₦1,938.74, showing a 2.6% appreciation.

However, despite this progress, experts have cautioned against expectations of a significant naira rally.

They cite global economic uncertainties and ongoing investor hesitation as major limiting factors.

Meanwhile, international commodity markets experienced notable shifts over the same period.

Brent crude oil rose by 0.54%, trading at $64.78 per barrel.

The U.S. West Texas Intermediate (WTI) crude settled slightly lower at $61.53 per barrel.

Gold prices surged sharply, jumping 2.1% to reach $3,362.70 an ounce.

This was the metal’s strongest weekly performance in six weeks.

The rally in gold was driven largely by growing U.S. trade tensions and a weakening dollar.

These tensions have led global investors to seek safer assets like precious metals.

For Nigeria, stronger oil prices may offer some fiscal relief, given the country’s dependence on oil revenue.

However, the broader macroeconomic environment remains fragile.

CBN’s dollar interventions continue to play a crucial role in shielding the naira from further depreciation.

Nevertheless, experts argue that sustainable currency strength will depend on structural reforms and diversified revenue streams.

The naira’s short-term outlook remains cautiously optimistic, backed by central bank actions and modest investor re-entry.

But economic watchers remain alert to any shocks that could disrupt the fragile equilibrium.

As the government seeks to deepen investor confidence, stakeholders continue to push for transparency in monetary policy implementation.

Diaspora Digital Media (DDM) will continue to monitor developments in the FX market and broader economic landscape.

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