CBN Intervenes with $50m as FX Demand Surge Tests Naira Stability

The Central Bank of Nigeria (CBN) intervened in the forex market as a surge in foreign currency demand put pressures on the local currency at the official window and parallel markets. .

The stability of the naira faced challenges as the dollar adjusted in the global foreign exchange market, demonstrating the optimism that accompanied the reopening of the US government.

The Nigerian saw heightened demand for foreign currency amidst a slowdown in FX inflows at the currency market. Even with the CBN weekly FX intervention, the naira depreciated, weakening across both the official and parallel FX markets despite FX sales to banks. 

At the official window, the currency slipped 0.41% week-on-week to close at N1,442.43/$, while the parallel market recorded a sharper 1.49% decline, settling at N1,472/$.

The pullback reflects persistent demand pressures and deep-rooted structural mismatches that continue to shape Nigeria’s FX landscape. Nigeria’s external reserves, however, provided a modest buffer, rising 0.18% week on week to $43.43 billion from $43.35 billion.

The accretion was largely supported by steady crude oil earnings, improved non-oil inflows, and a sustained trade surplus—factors that collectively strengthened the CBN’s capacity to moderate volatility in the FX market.

 In the global commodities space, oil prices surged as renewed Ukrainian drone strikes targeted Russia’s critical Novorossiysk export hub, heightening fears of potential supply disruptions.

US West Texas Intermediate (WTI) crude gained 2.71% to $60.28 per barrel, while Brent crude rose to $64.54 at the same time. Analysts said the escalation forms part of Ukraine’s intensified campaign on Russian refinery infrastructure.

Analysts expect further upside risks as upcoming U.S. sanctions on Rosneft and Lukoil, effective November 21, threaten to constrain Russian supply even more.

Looking to the week ahead, analysts at Cowry Asset expect the naira to trade with a relatively stable tone, supported by firmer external reserves, steady FX inflows, and an increasingly orderly market structure.

Sentiment also remains bolstered by Nigeria’s recent Eurobond issuance, which has eased supply concerns and anchored expectations of narrow-band consolidation in the near term.

Cowry Asset expressed that improved market liquidity is likely to give the local currency some breathing room. “We also expect the global risk-off mood, which lifted traditional safe-haven currencies such as the Japanese yen and Swiss franc, to weigh on the U.S. dollar,” the firm said.

They also noted that a softer dollar could boost naira demand and provide short-term support for the local currency. Analysts at Cordros Capital Limited said they maintain a positive outlook on the naira, supported by expectations of sustained FX liquidity.

Rising non-oil exports and improving market confidence are expected to boost inflows, while externally, healthy FX reserves, a positive current account position, and a firmer global monetary easing are expected to reinforce foreign investor sentiment and stimulate additional FX market inflows.

First Holdco Dips Below N1.3trn Amidst Huge Trading Volume
The post CBN Intervenes with $50m as FX Demand Surge Tests Naira Stability appeared first on MarketForces Africa.