The naira appreciated to N1,328.2154 per dollar in the Nigerian Foreign Exchange Market (NFEM) after the Central Bank of Nigeria (CBN) injected fresh dollar liquidity, improving from N1,329.2129/$ in the previous session.
CBN Sells $151 Million to Banks
The CBN sold $151 million to eligible deposit money banks, following renewed pressure on the local currency. The intervention aimed to boost dollar supply to financial institutions and support smoother FX transactions.
Trading during the session ranged between N1,322.71 and N1,333 per dollar, indicating relative stability despite continued demand for foreign currency. The CBN's actions are closely monitored by businesses, importers, and investors because dollar availability influences import costs, production inputs, and consumer prices.
Dollar Transactions Jump Sharply
Activity among financial institutions rose significantly, with CBN data showing a sharp increase in dollar transactions. The number of deals jumped to 234 from 86 previously, highlighting a substantial rise in activity among authorised market participants.
The increase in transactions suggests improved liquidity, although sustained demand for dollars means the naira could still face periods of pressure. For Nigerian businesses dependent on imported raw materials, machinery, and finished goods, a stronger and more stable naira could help reduce uncertainty around replacement costs and pricing.
External Reserves Provide Support
Nigeria's external reserves, reported at about $54.34 billion, could provide the CBN with additional room to support the FX market when necessary. Higher reserves generally strengthen the central bank's ability to meet legitimate foreign exchange demand and respond to periods of excessive volatility.
However, repeated intervention can also indicate that underlying dollar demand remains strong, meaning the sustainability of the naira's gains will depend on continued FX inflows and market liquidity. Analysts expect the currency to remain around its current trading range in the near term, with movements largely determined by dollar demand, foreign inflows, and the CBN's liquidity management.
For households and businesses, attention will now turn to whether the naira can consolidate its latest gains and whether the improvement eventually filters into prices in the wider economy.
