Naira Slips 0.55% Despite $430m CBN Support

Naira Slips 0.55% Despite $430m CBN Support

Nigeria’s foreign exchange market remained under pressure in July as strong demand from importers, manufacturers and foreign investors outpaced available dollar supply, according to Meristem Research.

The naira depreciated by 0.55% month-on-month to an average of N1,374.61/$ in the official market, compared with N1,366.99/$ in June, despite nearly $430m in Central Bank of Nigeria (CBN) interventions.

The parallel-market rate weakened further by 1.25% to N1,409.73/$.

Meristem expects the currency to remain broadly stable in the near term, supported by CBN interventions, oil receipts and improved foreign portfolio inflows.

It noted that the CBN’s new FX BDC Purchase Tracker could enhance transparency by allowing real-time monitoring of sales to Bureau de Change operators.

Prof. Adi Bongo of Lagos Business School said fundamentals remain solid. “We’ve had the naira stabilised around a very narrow band… thanks to strict regulatory oversight of the central bank. Judging from the fundamentals, then there is no reason for any sort of anxiety regarding the naira,” he explained, adding that geopolitical risks such as the US-Iran conflict could pose challenges.

Ayokunle Olubunmi of Agusto & Co. said periodic CBN interventions were acceptable. “We expect that we’re going to have some either appreciation or devaluation; however, it will be within a particular threshold,” he noted, citing seasonal demand pressures from travel, school fees and medical tourism.

CBN reserves climbed to $52.2bn, the highest in 17 years, giving the bank ample firepower to stabilise the market. FMDQ data showed spot transactions fell 46.98% to $1.96bn in the week ended August 14, while FX forwards surged 263.56% to $90.89m, suggesting traders are…