Despite the Central Bank of Nigeria’s (CBN) recent intervention, the naira continues to face pressure in the foreign exchange market.
Over the past week, the CBN injected $166 million into the forex market via authorised dealer banks, aiming to curb growing demand for the U.S. dollar at the official window.
CBN Intervenes to Support the Naira
The Nigerian foreign exchange market recorded a relatively stable yet cautious week, supported by intermittent CBN interventions.
At the Nigerian Foreign Exchange Market (NFEM), the official spot rate ended Friday at ₦1,532.51/$, a slight improvement from ₦1,533.56/$ at the start of the week. Throughout the week, the naira fluctuated between ₦1,526/$ and ₦1,536.50/$, finally closing at ₦1,530/$.
Analysts from Market Forces Africa suggest that this narrow trading band reflects the CBN’s active role in managing the naira’s value amid sustained dollar demand from importers, investors, and businesses.
Forward Market Shows Bearish Sentiment
While the spot market exhibited modest stability, the forwards market painted a more pessimistic picture, with all contract durations experiencing depreciation as investors hedge against further naira weakness:
1-month contract: down 0.1% to ₦1,577.15/$
3-month contract: dropped 0.3% to ₦1,652.88/$
6-month contract: depreciated 0.5% to ₦1,764.11/$
1-year contract: fell 0.8% to ₦1,975.38/$
This bearish trend signals low confidence in the naira’s long-term strength, despite Nigeria’s external reserves rising by $565 million to reach $40.72 billion.
Analysts Predict Short-Term Stability
Experts at AIICO Capital Limited remain cautiously optimistic, believing that the CBN’s strategic interventions and fiscal policies will maintain some level of near-term stability.
“We expect the FX market to hold steady in the short run, supported by ongoing policy refinements and liquidity management from the Central Bank,” the firm stated.
However, some warn that without increased dollar inflows through enhanced exports and foreign investment, the cost of defending the naira could become unsustainable.
Global Commodity Prices Add Pressure
Nigeria’s FX outlook is further complicated by volatility in global commodity markets. Brent crude, the country’s major foreign exchange earner, slipped 41 cents to $66.18 per barrel, while U.S. WTI crude fell to $63.17.
Meanwhile, gold prices dropped by 1.82% to $3,337.02 per ounce, as stronger U.S. inflation data reduced expectations for interest rate cuts.
Outlook: Fragile Stability Amid Market Turbulence
While the CBN’s recent $166 million forex injection offers temporary relief, forward contract declines indicate investor caution ahead.
With external reserves strengthening, the central bank has more room to intervene, but sustaining confidence in the naira remains a critical challenge.
“The CBN should leverage the gains in external reserves to support the naira further,” said Janet Ogochukwu, senior banker and economist. “We anticipate a stronger naira in the coming weeks, as improved liquidity from recent interventions takes effect.”
Naira Approaches Parity in Official and Parallel Markets
The naira’s depreciation has also narrowed the gap between official and parallel market rates. Data from the CBN shows that as of Thursday, July 17, 2025, the differential between official and black market rates fell to less than ₦2.
On that day, the naira closed trading at ₦1,533.11/$ on the official market, with intraday highs of ₦1,538/$ and lows of ₦1,520/$, eventually closing at ₦1,536/$.
The CBN’s active engagement in the forex market continues to provide some respite for the naira, but persistent challenges including external economic pressures, weak forward market sentiment, and fluctuating commodity prices keep the currency’s outlook fragile.
