CBN Mops Up $190 Million to Slow Rapid Naira Appreciation

CBN Mops Up $190 Million to Slow Rapid Naira Appreciation

The Central Bank of Nigeria (CBN) last week intervened in the foreign exchange (forex) market, buying about $189.8 million to slow the rapid appreciation of the Nigerian naira at the official window. Analysts say the move aims to absorb excess US dollar supply, stabilise the currency, and prevent market disruptions that could affect investors and the broader economy.

The naira had strengthened sharply in recent weeks, closing at around ₦1,346.32/$ in the official market — a week-on-week gain of ₦9.09. The parallel market also recorded gains, with rates improving by ₦60 to about ₦1,340/$. As a result, the FX spread — the difference between official and parallel rates — narrowed significantly to 0.47% from 3.29% the previous week, signalling improved convergence between the markets.

TrustBanc Financial Group noted that the naira’s successive rally could have prompted foreign investors to exit the fixed-income market, selling their holdings to repatriate profits. This scenario could have triggered higher US dollar demand, putting additional pressure on the naira and weakening market stability.

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Normally, central banks sell dollars to support the currency, but the CBN reversed this trend for the first time in months, buying dollars to moderate gains and prevent speculative surges. Analysts said this measured intervention reflects the bank’s commitment to exchange rate stability and orderly FX market operations.

On the macroeconomic front, Nigeria’s external reserves have remained robust, surpassing $46 billion, supporting the CBN’s ability to manage market dynamics. Strong oil prices, rising reserves, and reform-driven FX inflows have contributed to the naira’s stability, even amid lingering geopolitical risks.

Economists warn that excessive naira appreciation could reduce the competitiveness of Nigerian exports and prompt capital flight, affecting domestic investment. By moderating gains, the CBN seeks to balance currency stability, investor confidence, and the nation’s economic fundamentals.

Investors and businesses are being urged to monitor the FX market closely, as central bank interventions may influence short-term forex availability and pricing. Analysts expect the CBN to continue careful market management while promoting long-term currency stability.

CBN Mops Up $190 Million to Slow Rapid Naira Appreciation