…CBN injected $580 million into the market in May 2025 to defend the naira
…Gross FX reserves declined for the fourth consecutive week
SAT JUNE 14 2025-theGBJournal|The Nigerian naira fell against the U.S. dollar on Friday as the Central Bank of Nigeria (CBN) abstained from intervening on the official foreign exchange market amid rising concerns over external reserves’ sustainability.
By close of trading, the naira dropped by 0.5% w/w to N1,557.19/US$ at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM) after strong ending the previous week.
The CBN injected $580 million into the market in May 2025 to defend the naira, leading to a 66bps appreciation to N1,586.15/US$ last week, but raising concerns over external reserves’ sustainability, which declined to $38.05bn.
The FX market stability was aided by improved liquidity from CBN interventions, sporadic exporter and investor inflows, and stronger market confidence following Moody’s upgrade of Nigeria’s sovereign credit rating from Caa1 to B3.
Recall that Nigeria fully repaid its IMF debt by May 2025, boosting fiscal credibility, while diaspora remittances rose 44.5% y/y to $4.76bn in 2024, providing further support to the external sector.
Also, improved inflows from Foreign Portfolio Investors (FPIs), primarily contributed to the stability of the naira.
However, persistent global pressures, which have now been exacerbated by the renewed tensions in the Middle East, remain a downside risk to sustained inflows and naira stability.
In the forwards market, the naira rates appreciated across the 1-month (+1.4% to N1,583.16/US$), 3-month (+2.0% to N1,642.65/US$), 6-month (+3.0% to N1,724.76/US$) and 1-year (+4.8% to N1,887.05/US$) contracts.
Meanwhile, gross FX reserves declined for the fourth consecutive week, decreasing by US$232.05 million w/w to US$38.05 billion (10 June).
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