Naira Posts Mixed Fortunes as CBN Interventions, Rising Reserves Shape Market Outlook

The naira experienced a mixed performance over the past week, gaining 1.12 per cent at the official foreign exchange market but slipping 0.49 per cent at the parallel market.

At the official window, the local currency strengthened to ₦1,457.95 per dollar from ₦1,475.35 the previous week. Analysts attributed the improvement to moderate interventions by the Central Bank of Nigeria (CBN) and fresh inflows from foreign portfolio investors.

Conversely, the naira lost ground at the parallel market, easing by 0.49 per cent to close at ₦1,491.25 per dollar. Market watchers said the slight depreciation reflected persistent foreign exchange demand pressures and cautious investor sentiment.

Meanwhile, Nigeria’s external reserves continued to rise, reaching $42.87 billion as of Wednesday—about $170 million higher than the previous Friday’s figure. The steady increase was supported by improved oil receipts, stronger non-oil inflows, and a sustained trade surplus, all contributing to the CBN’s efforts to maintain FX stability.

Analysts at Cowry Asset Management projected a cautiously positive outlook for the naira in the near term. “We expect mild pressure on the naira as FX demand persists amid limited liquidity. However, steady oil inflows and a gradual build-up in reserves could offer some support,” the firm said in its weekly report. Afrinvest Research echoed a similar view, noting that the naira would likely trade within its current range barring any sudden market disruptions.

In the long term, the currency is expected to benefit from the CBN’s renewed interest in currency swap arrangements. During the IMF/World Bank Annual Meetings in Washington, D.C., CBN Governor Olayemi Cardoso acknowledged that previous local currency trade experiments had limited success but noted that the current framework aims for more sustainable results.

Backing the move, Comercio Partners, in its investment note “Traders Voice”, described the proposed ₦3.28 trillion naira–yuan swap deal as a step toward reducing dollar dependence and strengthening trade settlements. The firm added that with recent FX reforms making the naira more competitive, the renewed initiative could boost trade relations and stabilize foreign reserves—“third time’s the charm, hopefully,” it concluded.