By Seun Ibiyemi
The Central Bank of Nigeria (CBN) intervened in the foreign exchange market last week, purchasing about $190 million to moderate the naira’s rapid appreciation at the official window.
The move followed a strong rally by the local currency, which had appreciated significantly before retreating during the final three trading sessions that ended on Friday.
According to a report by TrustBanc Financial Group Limited, the apex bank bought $189.80 million to absorb excess dollar supply and curb further gains by the naira marking its first dollar purchase in a long time.
Analysts had cautioned that the naira’s sustained rally could trigger an exit by foreign portfolio investors from the fixed-income market.
They warned that a sell-off in investment securities could spike demand for the U.S. dollar, potentially worsening market conditions and accelerating capital outflows.
Despite the absence of heavy FX intervention in recent weeks, the naira remained relatively stable against the dollar.
Data from TrustBanc showed that the currency appreciated by N9.09 week-on-week at the official window to close at N1,346.32 per dollar. At the parallel market, the naira strengthened further, gaining N60.00 to settle at N1,340 per dollar.
The FX spread between the official and parallel markets narrowed sharply to 0.47 per cent from 3.29 per cent recorded the previous week, indicating improved convergence between both segments.
On the macroeconomic front, analysts noted that firmer oil prices, rising foreign reserves and reform-driven capital inflows continued to support currency stability, despite lingering geopolitical risks in the global economy.
