CBN Dollar Sales Strenghtens Naira At Official Window

In the week ended Friday August 29, the naira closed on a firmer note in the official foreign exchange market, buoyed by the Central Bank of Nigeria’s (CBN) targeted interventions, even as the parallel market remained largely unmoved.

At the Nigerian Foreign Exchange Market (NFEM), the domestic currency appreciated to N1,531 per dollar on Friday, August 29, 2025, after the apex bank injected $50 million into the system through authorised dealer banks. The move, which eased demand-side pressures, pulled the intraday spot rate down to N1,534.50/$1 at its strongest level before settling at the week’s closing rate.

In contrast, the parallel market rate held steady at N1,540/$1, leaving a narrow gap of about N9 between the official and unofficial markets. Analysts say the differential underscores persisting speculative activity and muted inflows from autonomous sources, but the CBN’s steady hand has prevented wider volatility.

The week’s performance marked a partial recovery for the naira, which had briefly come under pressure earlier, slipping towards N1,539/$1 before staging its best daily rally on Thursday, when it gained N1.6 to close at N1,535.47/$1. Beyond exchange rate dynamics, Nigeria’s external reserves offered a rare bright spot, climbing to $41.267 billion after receiving additional inflows of $23.421 million.

Higher oil receipts also lent support, as Brent crude hovered above $68 per barrel, notching a second consecutive weekly gain of about one per cent. The money market reflected improved system liquidity, with the Nigerian Interbank Offered Rate (NIBOR) declining across most maturities.

The overnight rate fell by 22 basis points to 26.78 per cent, while the one-month, threemonth, and six-month tenors retreated by 11, 22, and 37 basis points, respectively. The Open Repo Rate (OPR) remained unchanged at 26.50 per cent, while the overnight rate dipped slightly by a single basis point to 26.95 per cent.

Activity in the treasury bills market painted a mixed picture. While yields on the one-month and three-month Nigerian Treasury Bills True Yield (NITTY) rose by 16 and 67 basis points, longer-dated instruments softened, with six-month and 12-month yields sliding by 6 and 26 basis points. On average, yields rose by 14 basis points to 18.94 per cent, suggesting lingering risk aversion and weak secondary market appetite.

The bond market, however, closed the week bullish, with average yields declining by three basis points to 17.10 per cent, supported by renewed buying interest from institutional investors. In contrast, Nigeria’s Eurobond segment ended bearish, with average yields inching higher by one basis point to 7.96 per cent, reflecting reduced offshore appetite for emerging-market paper.

Overall, the naira’s appreciation at the official window underscores the CBN’s determination to steady the currency through calibrated supply interventions, even as the gap with the parallel market remains a reminder of unresolved structural imbalances.

Market watchers say sustained inflows from oil exports and improved foreign reserves provide short-term relief, but a more durable strengthening of the naira hinges on deeper reforms that broaden non-oil exports and attract long-term capital.