The Central Bank of Nigeria (CBN) has taken decisive action to stabilize the foreign exchange market, injecting a fresh $150 million into the official window. This aggressive intervention comes as the nation grapples with a dramatic decline in dollar inflows and mounting pressure on the local currency.
CBN Becomes Primary Dollar Supplier Amid Inflow Crisis
Data reveals a concerning trend: total foreign exchange inflows into Nigeria plummeted by nearly 50% week-on-week. The figure dropped sharply to approximately $730 million, a significant fall from the $1.46 billion recorded the previous week. With this drastic reduction, the CBN emerged as the single largest source of dollar supply, cushioning the market from potential volatility.
The bank executed its latest intervention through sales to commercial banks and authorised dealers. This move was critical given the concurrent rise in import demand and thinning dollar supply, conditions that had triggered sharp exchange rate swings in recent trading sessions. Foreign portfolio investors contributed less than exporters and the CBN, highlighting continued caution from offshore players.
Naira Records Modest Gain Following Intervention
The CBN's $150 million injection provided immediate, albeit modest, relief for the Nigerian naira. Following the sale, the local currency appreciated against the US dollar at the official spot market. By the close of trading on Tuesday, December 23, 2025, the naira had strengthened by ₦6.57 to settle at ₦1,449.99 per dollar.
During the trading session, the exchange rate fluctuated within a band of ₦1,455.50 to ₦1,447.50 per dollar, indicating that demand pressures persisted even with the improved supply. Market analysts and participants largely credited the naira's gains to the central bank's timely action, suggesting that without it, the currency could have faced a much steeper depreciation.
External Reserves See Marginal Increase
In a related positive development, Nigeria's external reserves showed a slight uptick. Updated figures from the CBN indicate that the gross external reserves rose by $19.19 million to reach $45.24 billion. This increase pushes the year-to-date growth to 10.66%.
While the build-up is marginal, it offers a degree of reassurance to investors and traders regarding the central bank's capacity to continue supporting the FX market if necessary. The reserves act as a critical buffer for the economy.
The global economic landscape presented mixed signals. Oil prices edged higher, with Brent crude gaining 1.17% to settle at $62.30 per barrel, supported by geopolitical supply risks. Gold prices also advanced on safe-haven demand. For Nigeria, sustained oil price strength could provide future relief for foreign exchange earnings, potentially easing pressure on the naira in the coming months.
This intervention contrasts with earlier reports of robust FX inflows in 2025. Data had shown net dollar inflows climbing to $41.73 billion in the first eight months of the year, a 12.3% increase from the same period in 2024. The current situation underscores the volatile and dynamic nature of the foreign exchange market, requiring constant vigilance from monetary authorities.
