Naira weakens to N1,602 as forex inflows fall 6%, CBN intervenes with $116m

BY TEMITOPE ADEBAYO

The naira closed weaker against the US dollar at N1,602.18 last week, as foreign exchange inflows into Nigeria’s official market dipped by 5.7 per cent in April to $3.67 billion, down from $3.90 billion in March.

Data from the FMDQ Exchange showed that the downturn was driven by a 16.5 per cent decline in foreign inflows, which slumped to $657.40 million in April—the lowest level in seven months—from $787.20 million in March.

In response to the thinning liquidity, the Central Bank of Nigeria (CBN) ramped up interventions, injecting a total of $116 million across multiple sessions. A notable $50 million sale early in the week helped drive rates as low as N1,596, temporarily easing pressure on the local currency.

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Despite subdued demand and moderate foreign portfolio inflows, the naira still depreciated by 16.5 basis points from N1,599.54 at the start of the week, as trades ranged between N1,580 and N1,603.50 at the Nigeria Foreign Exchange Market (NFEM).

Cordros Capital analysts noted that foreign portfolio investor inflows fell by 15.7 per cent month-on-month, while corporate dollar supplies dropped by 40.5 per cent. However, foreign direct investment rose sharply by 112.7 per cent, reflecting marginal improvement in long-term investor interest.

On the domestic front, inflows also saw a slight decline of 2.9 per cent to $3.02 billion. This was largely due to weaker activity from exporters/importers and non-bank corporates, which dropped by 23.9 per cent and 23.3 per cent respectively. In contrast, inflows from individuals and the CBN surged by 125.4 per cent and 43.8 per cent respectively.

“While improved market structure and sustained CBN participation are supporting relative stability, lingering global risks and capital flow constraints continue to weigh on FX liquidity,” Cordros Capital said.

In the forward market, naira contracts appreciated across the board as demand pressures eased. The 1-month forward rate rose by 0.2 per cent to N1,646.57, the 3-month by 0.6 per cent to N1,724.19, the 6-month by 0.5 per cent to N1,837.00, and the 1-year forward climbed by 0.9 per cent to N2,056.24 per dollar.

Meanwhile, Nigeria’s external reserves inched up by $135.9 million to $37.93 billion, offering mild support to the currency outlook.

Oil prices closed lower on Friday, posting their largest weekly loss since March. Brent crude fell by 1.4 per cent to $61.29 per barrel, while US WTI dropped 1.6 per cent to $58.29, ahead of the OPEC+ meeting on production policy. Gold prices also declined, pressured by easing U.S.-China tensions and upbeat American labour data.