Naira Loses 2.6% Value as CBN Pumps $668.8 Million into FX Market in March
- The naira depreciated by 2.4% and 2.6% respectively in March at the Nigerian Foreign Exchange Market (NFEM) and the black market in March
- Reports say the depreciation came despite the Central Bank of Nigeria (CBN) intervening with $688.8 million to ease pressure
- Also, Nigeria’s forex reserves lost about $110 million to $38.31 billion, a report by AIICO Capital said
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency, the naira, shed 2.4% and 2.6% of its value in March at the Nigerian Foreign Exchange Market (NFEM) and the black market relative to the previous month.
A market report from Afrinvest shows that the local currency depreciated to N1,536.82 per dollar and N1,530 at NFEM and the parallel market windows, respectively.
Source: Getty Images
The naira depreciated despite CBN’s interventions
Also, AIICO Capital disclosed in its monthly macroeconomic market report for March that the naira was under pressure despite the Central Bank of Nigeria's (CBN) $688.8 million in interventions.
The reports said this happened despite the interventions by the apex bank, which had substantial dollar sales amounting to $688.8 million.
However, the naira weakened by 2.97% monthly, closing at N1,536 per dollar from N1,492.49 at the beginning of March.
According to the report, demand remained steady in the review period, especially for foreign portfolio investors and local firms.
AIICO disclosed that the parallel market followed the trend, with the naira depreciating by N43.50 to N1,536 per dollar in that segment of the FX market.
The naira closed negatively in March
Despite liquidity improvements, demand continued to outweigh supply.
In the final week of March, the naira remained under pressure despite CBN dollar sales.
Every quarter, the naira fell by seven basis points at NFEM.
Meanwhile, external reserves depreciated by $110 million to $38.31 billion, the AIICO report said.
Regarding the outlook, AIICO Capital disclosed that the apex bank’s sustaining liquidity stabilised the local currency.
CBN sells $197.71 million to currency dealers
The CBN disclosed that the naira was impacted by the global macroeconomic shifts caused by the new tariffs imposed by the US President, Donald Trump.
Legit.ng reported that the CBN’s Director of the Financial Markets Department, Omolara Duke, disclosed that the apex bank said the recent movements in the FX markets between April 3 and 4, 2025, necessitated the injection of $197.71 million by CBN via sales to authorised dealers.
The US currency sold between N1,519 and N1,595.20 on Friday, April 4, 2025.
The financial sector regulator said it continues to monitor global and domestic trends and remains optimistic about the resilience of the Nigerian FX framework, which was designed to adjust to evolve to fundamentals.
Last week, the naira recorded increased volatility in the interbank market, staying relatively stable at N1,525 to N1,535 per dollar amid CBN’s support and moderate offshore inflows.
Meanwhile, by midweek, there was a shift as offshore demand rose, caused by weakened oil prices due to OPEC’s supply increase and global risk-off sentiment caused by Trump’s tariff announcements.
The development led to an intense FX demand pressure and limited supply, pushing the naira to N1,570 per dollar.
The naira depreciated by 1.97% weekly, closing at N1,567.02, with FX reserves declining by $149 million to $38.15 billion.
Naira: JP Morgan predicts positive outlook in 2025
Meanwhile, JP Morgan, the US investment banking giant, predicted that the naira would stabilise at N1,450 per dollar in 2025.
The company disclosed this in its note to investors on Wednesday, April 2, 2025, stating that the Nigerian market provided enough rate protection to ease potential FX losses.
According to the bank, it expects Nigeria's T-Bills to continue to perform well due to imminent catalysts as the Central Bank of Nigeria (CBN) published net FX reserves, while President Bola Tinubu changed the board and management of the NNPC.
JP Morgan hails leadership change in NNPC
It rated the net FX reserve release as a short-term catalyst and NNPC leadership change as a medium-term catalyst.
JP Morgan sees the two decisions as a confidence booster for Nigeria, which has battled FX and macroeconomic challenges.
Source: Getty Images
After the decisions, the forex market experienced some stability, though the naira depreciated slightly.
Naira gains against USD
Legit.ng previously reported that the naira climbed to its highest against the dollar in two weeks after the Central Bank of Nigeria (CBN) reported a net forex reserve increase of $23.11 billion, the highest in three years. \
The naira rallied at a one-week high of N1,531.25 per dollar on Monday, March 31, 2025, representing a 0.4% or N5.57 gain from N1,536 on Friday, March 28, 2025.
Then the naira climbed again on Wednesday, April 2, 2025, closing at N1,534 from N1,357.
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Source: Legit.ng
