CBN Intervenes to Moderate Naira's Rapid Appreciation Amid Rising Reserves
The Nigerian naira demonstrated significant strength against the US dollar at the official foreign exchange window last week, prompting the Central Bank of Nigeria to implement a strategic intervention aimed at moderating the currency's rapid appreciation. This move marks a shift from the bank's previous defensive posture to a more stabilising role in the market.
Market Dynamics and CBN's Strategic Intervention
In an environment characterised by subdued demand pressures, the naira strengthened at the Nigerian Foreign Exchange Market, supported by steady inflows from foreign portfolio investors, exporters, and non-bank corporates. The improving liquidity conditions propelled the local currency to levels that appeared to unsettle monetary authorities, leading to decisive action.
According to market analysts at TrustBanc Financial Group Limited, the CBN purchased approximately $72 million from the FX market as the naira's gains accelerated. This intervention was designed to absorb excess dollar liquidity and prevent excessive volatility, reflecting a nuanced approach to currency management.
Weekly Performance and External Reserves Surge
Despite a brief pullback following the CBN's intervention, the naira concluded the week on a stronger footing. It appreciated by ₦20.36 to close at ₦1,366.1954 per dollar, compared with ₦1,386.55 recorded at the previous week's close. Throughout the trading period, the currency traded within a relatively tight band of ₦1,348.00 and ₦1,396.00 per dollar, recording gains across all sessions and reinforcing positive sentiment.
Nigeria's gross external reserves experienced a sharp increase, climbing by $736.67 million to reach $46.91 billion. This growth was bolstered by inflows from oil receipts, remittances, and other non-oil sources, providing a stronger buffer against short-term external shocks and enhancing market confidence.
Analyst Insights and Market Outlook
Economist and senior banker Janet Ogochukwu highlighted the deliberate nature of the CBN's action, aimed at narrowing the gap between the official and parallel forex markets. She noted that while the naira was rallying rapidly in the official market, it was declining in the parallel window, creating a disparity of approximately ₦94 that undermined government objectives.
Analysts at Anchoria Securities Limited expressed optimism regarding the near-term outlook for the naira, citing rising external reserves, renewed foreign portfolio inflows, and a decline in speculative demand as key supportive factors. They anticipate that FX market stability will persist, underpinned by policy measures and improving investor confidence as reserves continue to expand.
Global Commodity Trends: Oil Weakness and Gold Rally
In global markets, Brent crude prices softened by 3.21 per cent to $67.60 per barrel, driven by persistent oversupply concerns as rising non-OPEC+ output and modest demand growth outweighed geopolitical risks. Anchoria Securities forecasts Brent crude trending toward the low $60s in 2026, citing structural oversupply as the dominant theme.
Conversely, gold prices rallied strongly, with spot gold gaining more than $100 last week to close near $4,966.22 per ounce. This surge was supported by dip buying after a brief decline below the $4,800 level, positioning the precious metal for a solid weekly gain and highlighting contrasting trends in commodity markets.
Conclusion: Sustained Confidence and Balanced Growth
The naira's performance and the CBN's intervention reflect a dynamic foreign exchange landscape in Nigeria, where rising reserves and strategic monetary policies are fostering stability. As external reserves strengthen and market confidence grows, the outlook for the naira remains positive, supported by balanced demand-supply dynamics and proactive regulatory measures.
