The Nigerian naira recorded a slight appreciation at the official foreign exchange window last week, strengthening to ₦1,547/$ from ₦1,549/$. The improvement—though modest—was largely supported by the Central Bank of Nigeria’s (CBN) sustained interventions aimed at easing corporate dollar demand and managing market liquidity.
According to market analysts, the uptick in the naira’s value reflects a combination of targeted foreign exchange interventions and increased inflows from foreign portfolio investors (FPIs), who are responding to improving policy signals and more attractive investment opportunities in Nigeria.
Strong Investor Demand in OMO Auction
A key driver of the recent forex inflow was the CBN’s Open Market Operation (OMO) auction, which aimed to absorb excess liquidity in the financial system. The auction drew strong interest, especially from foreign investors, with the apex bank offering ₦600 billion across two maturities—155-day and 204-day tenors.
Total bids reached ₦1.14 trillion, nearly doubling the offer size. Eventually, the CBN allotted ₦1.07 trillion, with stop rates clearing at 24.20% and 24.59%, respectively. This level of participation, particularly from FPIs, has contributed to improved dollar supply and bolstered the naira at the official window.
Cordros Capital Limited highlighted that the inflows from FPIs targeting the OMO instruments were critical in cushioning foreign exchange pressure and sustaining the naira’s resilience.
Parallel Market Divergence and Outlook
While the official market reflected modest gains, the naira dipped slightly at the parallel market, weakening to ₦1,585/$—underscoring the persistent gap between official and black-market rates.
Despite this divergence, analysts at Cowry Asset Management remain optimistic about the currency’s near-term outlook, projecting continued stability in the coming week, backed by ongoing CBN interventions and gradually improving foreign exchange inflows due to structural reforms.
Cordros Capital researchers also expressed confidence in the central bank’s ability to manage volatility but cautioned that external risks—particularly geopolitical tensions in the Middle East—could affect the exchange rate environment. The recent surge in oil prices, however, is seen as a net positive for Nigeria’s oil-dependent economy.
Forex Reserves Under Pressure
In spite of the currency’s marginal gains, Nigeria’s external reserves continued to slide. According to data published on the CBN website, reserves dropped further to $37.71 billion as of June 20, raising concerns about the sustainability of the current pace of intervention if fresh inflows do not materialize.
Fiscal-Monetary Policy Coordination in Focus
In a bid to reinforce macroeconomic stability, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, met with CBN Governor Olayemi Cardoso last week to strengthen coordination between fiscal and monetary authorities.
The meeting followed the announcement that headline inflation eased to 22.97% in May, marking a notable shift in the inflation trend. According to a statement from the Ministry of Finance, discussions centered on “sustaining and accelerating this momentum” to stabilize prices, build investor confidence, and support private sector-led growth.
“The Ministry’s commitment to collaborative economic management signals a renewed focus on driving sustainable growth and development in Nigeria,” said Mohammed Manga, Director of Information and Public Relations.
Conclusion: Progress with Caution
The naira’s performance at the official market highlights the cautious optimism surrounding Nigeria’s foreign exchange reforms. However, challenges remain, particularly with falling reserves and external pressures. Sustained policy alignment and strategic interventions will be key to anchoring long-term currency stability and economic growth.