Central Bank of Nigeria (CBN) defended the local currency against the dominant US dollar as forex supply declined by 25% week on week. To maintain naira stability, the CBN sold about 81 million dollars to banks and other authorised FX dealers at the official window last week. Demand for dollars had surged above the available FX supply in the absence of an open market operations. In the forex market, total dollar inflows declined to US$979.10 million from US$1.31 billion in the prior week, Coronation Research said in its report. The research arm of Coronation Merchant Bank said foreign portfolio investors (FPIs) remained the leading contributors, accounting for 51.39% or US$503.10 million of total inflows. Non-bank corporates followed with 23.37% of the inflows which amounted to US$228.80 million, while the CBN exporters/importers contributed 13.05% or US$127.80 million and 11.12% or US$108.90 million, respectively.
Other forex inflow sources made up just over 1% of the total amount supplied last week amidst rising external reserves. The nation’s gross external reserves rose by US$693.96 million last week to US$38.62 billion, marking the third consecutive weekly increase. This buildup likely reflects steady FPI inflows in recent weeks. “We expect the FX market to remain relatively stable within its current trading range, barring any unexpected global or domestic macroeconomic shocks. “We also expect foreign investors to continue to seek opportunities in the fixed income market supported by an improving macro-picture”, Coronation Research stated in its report. In spite of the CBN FX intervention, the naira weakened by an average of N2.38/USD to N1,534.72/USD, as demand pressures outpaced available supply.
During the week, the CBN intervened by selling approximately $81.00 million to support the market. Brent crude ended the week down 1.44% week on week, closing at US$67.60 per barrel (bbl) compared to $68.59/bbl in the previous week. This brings the year-to-date decline to 9.43%, with the 2025 average price at $71.77/bbl—about 10.13% lower than the 2024 average, according to Coronation Research. Also, the Nigerian Bonny light declined by 1.37% and closed at $73.36/bbl. Oil prices were volatile last week, initially rebounding on reports that Russia planned to restrict gasoline exports to all but a few allied nations under existing supply agreements.
Also, data showed U.S. crude inventories declined by 3.2 million barrels to 419 million barrels, fueling demand optimism. However, the rally lost momentum as traders turned cautious amid trade policy negotiations between the United States and the European Union. By Friday, prices slipped to a three-week low, weighed down by weak economic data from the U.S. and China alongside signs of rising supply. Over the weekend, the U.S. and the European Union finalized a framework trade agreement that imposes a 15% tariff on most EU goods—half the initially threatened rate—averting a broader trade conflict between the two major trading blocs that account for nearly one-third of global trade. The deal is expected to ease market uncertainty and could support global economic activity, potentially boosting future oil demand. On the supply side, while some OPEC+ members signaled readiness to raise production to regain market share, other panelists suggested no major deviation from the group’s existing output strategy.
CBN intervenes in FX Market as dollar inflow falls by 25%
