CBN Maintains Naira Stability Amid Increased Forex Demand

• The CBN intervened in the forex market, helping to slow the naira’s depreciation despite rising demand for dollars
• Nigeria’s FX reserves increased slightly, while the Treasury bills market saw stable yields, with investors focusing on new auctions
• In the bond market, investor caution led to a slight rise in average yields to 18.5%, reflecting balanced demand and supply

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology, Banking and the Economy.

The Central Bank of Nigeria (CBN) has helped prevent a rapid fall in the value of the naira by actively intervening in the forex market and reducing disruptions.

This action has kept the naira from weakening sharply against the dollar, according to a report on its performance.

The CBN’s intervention—selling over $300 million to approved dealers—helped limit further depreciation despite rising demand for forex.

The CBN's efforts appear to be working, as the naira has gained value in both the official and black markets in recent days.

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CBN adjusts exchange rates as naira depreciates slightly in official market, gains in black market

Currency traders reported exchange rates ranging from N1,512 to N1,552 per dollar.

In the parallel market, the naira also improved, trading at N1,590 compared to N1,600 the day before.

Stability in FX reserve, other assets

Meanwhile, Nigeria’s foreign exchange reserves increased slightly by $12.06 million to $38.36 billion, after falling for nine straight weeks.

Nigeria’s foreign exchange reserves dropped continuously for 33 days, losing over $1.3 billion in February, raising concerns among financial experts.

The CBN’s interventions in the forex market added more strain on the reserves, which are already under pressure from foreign debt payments and lower oil revenues.

However, the recent slight increase in reserves has provided some relief, helping the naira strengthen against the dollar and other major currencies in both official and parallel markets.

In the Treasury bills market, investors focused more on new auctions, leading to a slight drop in the average yield by one basis point to 20.7%.

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Naira depreciates as foreign exchange outflows increase

The Nigerian Treasury Bills (NTB) segment remained stable at 19.2%, while yields in the Open Market Operations (OMO) segment dipped slightly by three basis points to 22.4%.

Last week, the Debt Management Office (DMO) offered N550 billion worth of Treasury bills, with N70 billion for 91-day, N80 billion for 182-day, and N400 billion for 364-day bills.

Similarly, investors were cautious in the FGN bond market as demand and supply were closely matched. As a result, the average yield rose slightly by one basis point to 18.5%.

These moves by both the federal government and CBN have contributed to mounting some level of stability for the naira.

CBN mops up excess liquidity from banks

In related news, Legit.ng reported that the CBN withdrew about N1 trillion from circulation through Open Market Operations.

According to the apex bank, this step is meant to control inflation, reduce excess money in the economy, and support the naira.

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After two months of decline, Nigeria's FX reserves record growth again

The CBN said it remains focused on improving the country’s economy and has introduced several policies to achieve this goal.

Source: Legit.ng