The Central Bank of Nigeria (CBN) has stepped in to stabilize the foreign exchange market by selling $66 million to commercial banks. This intervention was aimed at easing pressure on the naira, which had been struggling due to a shortage of U.S. dollars......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
For two weeks, the naira had been under pressure following a brief period of appreciation. Due to high demand for dollars and limited supply, the exchange rate fluctuated negatively in 8 out of 10 trading sessions. By the end of the week, the naira had weakened by ₦8.09, closing at ₦1,509.70 per dollar in the official market despite the CBN’s efforts to stabilize it.
Throughout the week, demand for dollars remained strong, driving exchange rate fluctuations. At the beginning of the week, the naira traded between₦1,480 and₦1,515 per dollar, but increasing demand pushed rates even higher. By midweek, transactions occurred at rates between₦1,500 and₦1,513, according to a report by AIICO Capital Limited.
Towards the end of the week, the CBN’s intervention helped improve dollar liquidity slightly. As a result, trading rates on Friday ranged between₦1,480.64 and₦1,522 per dollar, offering some relief.
In the parallel market (also known as the black market), the naira gained ₦5, closing the week at ₦1,565 per dollar. This movement in exchange rates brought the official and black-market rates closer, reducing the difference between them to 3.33%, down from 4.22% the previous week.
The CBN’s foreign exchange intervention involved selling $66.45 million to banks at rates between₦1,497 and₦1,503 per dollar. However, financial experts warned that continuous interventions could deplete Nigeria’s foreign reserves. Recent data showed that the country’s external reserves had dropped to $39.10 billion amid global market uncertainties.
Meanwhile, oil prices rose as concerns over U.S.-China trade tariffs eased. Brent crude increased by 0.49% to $75.39 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.34%, reaching $71.53 per barrel. Gold prices, however, dropped by over 1% due to profit-taking but remained on track for a seventh consecutive weekly gain, closing at $2,892.59 per ounce.
Market analysts predict that oil prices might not rise significantly due to expectations that Russian oil supplies could return to the market if peace negotiations between Russia and Ukraine progress.