By Chris Agabi
The Naira appreciated to N1,534/$1 in the official exchange rate market on Friday following rapid auction sales to banks by the Central Bank of Nigeria (CBN).
The CBN had maintained FX sales to local deposit money banks to avoid potential exchange rate shocks as the yuletide season inches to an end.
The Naira in November 2024 fell to about N1,740/$1.
But the the CBN sustained auctioning US dollars at lower rates has boosted liquidity kept the naira gaining over N100 to the dollar in the parrael market.
Also last week, the CBN intervened in the forex market five times, and it launched another FX sale totalling $40 million at the beginning of the week.
On Friday, the naira appreciated by 0.30%, closing at N1,534 per US dollar in the official market. Meanwhile, in the parallel market, it ended the day at N1,650 per US dollar.
Reports say at the NAFEM window, the CBN sold over $400 million in interventions, with rates ranging from N1,640/USD to ₦1,660/USD across multiple sessions, AIICO Capital Limited said in a report. The interbank market, however, remained under pressure, with trades spanning ₦1,557/USD to ₦1,722/USD due to persistent demand for foreign exchange.
Also significant inflows from Foreign Portfolio Investors (FPIs) targeting high-yield government securities and exporter proceeds supported liquidity. Despite these efforts, suppliers of foreign exchange sought higher levels to sell their proceeds, reflecting persistent demand pressure in the market
Analysts at Afrinvest Limited have predicted N1,804 as the average exchange rate for 2025 on the prognosis that the surge in external reserves was propelled by inflows from inorganic sources. The financial market witnessed strong FX inflows from foreign portfolio investors in the second half of 2024. A huge US dollar volume was channelled into OMO bill auctions.
External reserves reached $40.848 billion, the amount seen three years ago.
Analysts believe that the foreign reserves would remain strong if the Apex Bank chose to defend the naira.
