Naira Falls to New Low After CBN Spends Millions of Dollar to Defend Currency

Naira Falls to New Low After CBN Spends Millions of Dollar to Defend Currency

  • About $669 million was spent on foreign exchange (FX) interventions by the Central Bank of Nigeria
  • This was done to prevent further devaluation of the naira, according to a report by AIICO Capital Limited
  • The trend coincides with declining dollar inflows and rising offshore foreign exchange demand

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

In the first quarter of 2025, the Central Bank of Nigeria (CBN) made foreign exchange (FX) interventions totaling about $669 million.

Nigerian currency naira falls
Report states that the $668.8 million in sales were done in order to shield the naira against additional devaluation. Photo Credit: CBN, Contributor
Source: Getty Images

The $668.8 million in dollar sales, according to a report by investment firm AIICO Capital Limited, were made to protect the naira from further depreciation.

This comes as offshore demand for foreign exchange is rising and dollar inflows are decreasing.

Stocks dropped at Monday's opening, indicating that President Donald Trump's sweeping tariffs are also upsetting global market stability.

The report also stated that the CBN ordered Bureau de Change (BDC) operators to buy $25,000 from authorized dealer banks at the official exchange rate in an effort to stabilize the parallel market.

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The nation's external reserves suffered despite these measures, falling from a three-year high of $43 billion as a result of debt repayment commitments and ongoing dollar sales to maintain the naira.

However, continued demand in the Nigerian Foreign Exchange Market (NFEM) caused the local currency to decline in March 2025, putting it under a lot of strain.

Over the course of the month, the naira lost 2.97% of its value, falling from N1,492.49/$ to N1,536.82/$, even though the CBN had invested $668.8 million in dollars.

The market opened the month at N1,510/$, with demand remaining elevated—particularly from foreign portfolio investors and local corporations. The parallel market reflected a similar strain, with the naira falling by N43.50 to close at N1,536.00/$.

The CBN's actions temporarily increased mid-month liquidity, but demand still exceeded supply. The naira was still under pressure at the conclusion of the quarter, despite slight advances and more dollar sales.

Read also

Exchange rate windows drift further apart as naira hits N1,600/$, CBN sells $197.71m to dealers

At the NFEM window, the currency showed a slight depreciation on a quarterly basis, and external reserves fell to $38.31 billion.

CBN defends Nigerian currency, naira
The nation's external reserves suffered despite CBN measures too save the naira. Photo Credit: CBN, Contrinutor
Source: Getty Images

The official and parallel market windows have drifted further apart as the naira hit a five-month low in the Nigerian Foreign Exchange Market (NFEM).

On Friday, April 4, 2025, the naira depreciated to N1,600 per dollar, down from N1,569 it traded the previous day.

The last time the naira traded near that rate was on December 3, 2024, when it exchanged at N1,608 per dollar.

JP Morgan predicts new naira exchange rate

Legit.ng reported that JP Morgan, the American investment banker, has said the change in the leadership of the Nigerian National Petroleum Company Limited (NNPC) and the release of Nigeria’s net foreign exchange reserves (NFER) are changing the tide in the market.

Amid increasing global uncertainty, JP Morgan upheld a positive rating on the Nigerian market, stating it is insulated from US slowdowns.

Read also

CBN urgently releases $197 milion into forex market as US tariff causes tension

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.

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Source: Legit.ng

Authors:
Zainab Iwayemi avatar

Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng

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