Naira weakens despite CBN’s $100m intervention as reserves rise to $45bn
The naira closed the week weaker against the United States dollar despite fresh foreign-exchange injections by the Central Bank of Nigeria (CBN), underscoring persistent demand pressure in the official market.
The currency depreciated by more than N3 week-on-week, settling at N1,450.43 per dollar on Friday compared with N1,446.74 at the end of November, as dollar supply continued to lag behind market demand.
Market dealers reported that demand for legitimate foreign-payment obligations remained elevated, driven by manufacturers, telecom operators and firms repatriating external commitments. Although the market recorded sporadic inflows from Foreign Portfolio Investors and occasional CBN interventions, liquidity conditions were insufficient to ease sustained pressure in the spot market.
The CBN sold $100 million to authorised dealers during the week to stabilise the market. Analysts noted that without the intervention, the naira would have weakened more sharply, having previously hit N1,421 per dollar in November, its strongest performance in the fourth quarter before heightened global political tension affected risk sentiment.
Despite the pressure on the currency, Nigeria’s external liquidity profile continued to strengthen. Gross external reserves rose for the nineteenth consecutive week, gaining $184.88 million to reach $45.04 billion.
Analysts at Cordros Capital said the global environment has become increasingly supportive of capital inflows as major economies shift towards monetary easing and geopolitical tensions moderate.
Cordros added that Nigeria’s positive current account position and rising reserves were helping to sustain investor appetite for local assets. The firm noted that import demand growth has remained moderate, assisting in containing structural demand pressures in the FX market. It expects the naira to remain broadly stable over the medium term, supported by improved net FX liquidity and stronger foreign inflows.
Global commodity markets also reflected shifting investor sentiment. Crude oil prices climbed close to a two-week high as expectations grew that the U.S. Federal Reserve would cut interest rates next week. Brent crude futures for February settled at $63.75 per barrel, up $1.37 or 2.20 per cent, while West Texas Intermediate crude closed at $60.08 per barrel, gaining $1.53 or 2.61 per cent.
Analysts said geopolitical uncertainty involving Russia and Venezuela is adding upside risk to supply forecasts.
Gold prices retreated as firmer U.S. Treasury yields offset support from a softer dollar. Spot gold fell 0.79 per cent week-on-week to close at $4,197.25 per ounce, with traders turning cautious ahead of key U.S. inflation data that could influence the Federal Reserve’s rate path. Market expectations remain tilted towards moderate optimism next week, with gold and oil likely to draw support from a lower interest-rate environment even as yields continue to cap upside for bullion.
