Market News

BY  temitope adebayo

The Central Bank of Nigeria (CBN) increased its intervention in the forex market last week by injecting $300 million in an effort to curb the naira’s persistent depreciation.

The intervention included an initial $200 million on Tuesday, aimed at stabilising the official spot rate, followed by an additional $100 million on Wednesday to ease pressure amid rising demand for foreign payments. Despite these measures, the naira’s decline persisted, marking 12 consecutive trading sessions of depreciation against the U.S. dollar.

Earlier in February, the naira had appreciated modestly against the dollar, rising by 1.94 per cent from 1,386.55/$ to close at 1,359.82/$. In the parallel market, the local currency gained 5.14 per cent, moving from 1,460.00/$ to 1,385.00/$.

Analysts at AIICO Capital expect the naira to remain volatile but broadly stable, citing robust external reserves, sustained high crude oil prices, and ongoing monetary and fiscal reforms as supporting factors. However, external shocks such as the U.S. and Israel’s attack on Iran could limit foreign portfolio inflows and weigh on the currency.

Meanwhile, the naira held firm against the British pound, settling at N1,850/£1 at the official market on Wednesday amid rising demand for naira-denominated assets and weakening economic signals from the United Kingdom.

Analysts say the N1,850/£ level has emerged as a key support point for the currency, while the pound traded around N1,878/£ in the parallel market, leaving a spread of less than 2 per cent.

The improved alignment between the official and parallel markets has been attributed partly to enhanced access to foreign exchange for Bureau De Change operators, which has increased liquidity and reduced parallel market pressure. The CBN has emphasised currency stability rather than aggressive appreciation, a strategy aimed at reducing volatility and strengthening investor confidence.

Global factors continue to influence the naira’s movement, with the British pound under pressure due to geopolitical tensions, rising energy costs, and stronger U.S. economic data. Analysts note that elevated oil and gas prices, alongside China’s halt on gasoline and diesel exports, could further affect currency markets.