The Central Bank of Nigeria (CBN) intervened in the foreign exchange market on Friday by selling $197.71 million to authorized dealers in an effort to stabilize the naira.
This move comes after the naira dropped 2.3 percent in just three days to close at N1,567.02 per dollar on April 4, compared to N1,531.25 on April 2.
This was the first foreign exchange intervention by the apex bank 2025 and comes as the naira faces pressure due to rising global economic tensions.
A key factor contributing to the decline has been the ripple effect of U.S. President Donald Trump’s renewed tariff policies.
The tariffs have triggered uncertainty across global markets and put additional strain on Nigeria’s currency.
In addition to tariff concerns, the ongoing slide in oil prices has added to the vulnerability of the naira.
Brent crude prices fell by 3.2 percent to $72.52 per barrel while Nigeria’s Bonny Light dropped more than 12 percent to around $65.50 per barrel. As oil remains Nigeria’s primary export, fluctuations in global oil prices have a direct impact on the naira’s performance.
Analysts view the CBN’s intervention as a necessary action to maintain market stability, but they also caution that the central bank may need to take further steps if the current market pressures persist.
The intervention could be the first in a series aimed at supporting the naira and managing the broader foreign exchange challenges Nigeria faces.
The depreciation of the naira is also linked to the suspension of the Naira-for-Crude initiative, which allowed local refineries to purchase crude oil in naira instead of U.S. dollars. With the policy’s six-month agreement ending on March 31, 2025, analysts suggest the suspension may have contributed to an increase in demand for dollars, further driving the naira’s weakness.
Afrinvest Securities notes that unless there is a rebound in oil prices or a major injection of foreign inflows, the pressure on the naira is likely to continue.
The investment firm has pointed out that the naira’s recent depreciation is also a consequence of the broader risk-off sentiment in global markets, driven by trade tensions and uncertainty surrounding U.S. tariffs.
With Nigeria’s external reserves slipping 0.3 percent to $38.17 billion as of April 2, 2025, down from $38.30 billion on March 28, the CBN will need to carefully monitor both global and domestic developments.
Analysts suggest that even if oil prices recover, the structural challenges facing Nigeria’s foreign exchange market may require long-term solutions beyond interventions.
