In a bid to stabilize the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) on Friday, April 4, 2025, injected a substantial $197.71 million into the market. This move, aimed at ensuring sufficient liquidity and maintaining smooth market operations, underscores the CBN’s commitment to fostering a stable and transparent FX environment. Dr. Omolara Omotunde-Duke, the Director of the Financial Markets Department, confirmed the development in a statement released on Saturday, highlighting the bank’s determination to uphold market integrity and operational transparency.
The CBN’s intervention, which took the form of sales to authorized dealers, is part of its broader strategy to maintain a well-functioning FX market amidst the global economic turbulence. The bank reiterated that this effort aligns with its long-term objectives of promoting a transparent, efficient, and stable foreign exchange market, noting that the liquidity injection was essential in supporting smooth operations despite the challenging global economic environment.
The CBN further explained that the decision to pump liquidity into the FX market was prompted by significant shifts in the global macroeconomic landscape. These shifts have been affecting numerous emerging markets, including Nigeria. The recent imposition of new import tariffs by the United States on goods from various economies has led to broader market adjustments, complicating the economic situation for oil-exporting countries like Nigeria. Additionally, the bank pointed out the decline in global crude oil prices, which had fallen by more than 12% to approximately $65.50 per barrel. Given that crude oil is a major revenue source for Nigeria, the drop in oil prices has posed challenges, influencing exchange rate dynamics and affecting market sentiment.
Despite these external challenges, the CBN emphasized its confidence in Nigeria’s FX framework, which it said is designed to adapt to changing economic fundamentals. The bank assured that it would continue monitoring both domestic and global market conditions closely to ensure the stability of the naira. Moreover, the CBN urged all authorized dealers to adhere strictly to the principles laid out in the Nigerian FX Market Code, emphasizing the importance of transparency and upholding high standards in their dealings with clients and other market participants.
On the same day, Nigeria’s official exchange rate fell to N1,600 to the dollar, marking a significant depreciation of 1.9% from the previous day’s closing rate of N1,569. This level represents the weakest the naira has traded since December 4, 2024, when it closed at N1,608 to the dollar. The depreciation of the naira over the first four days of April now stands at 3.9%, compared to the rate at the end of March, which was N1,537 to the dollar.
Throughout the trading day, the exchange rate fluctuated significantly. The intra-day high of N1,625 to the dollar marked one of the weakest levels seen this year, suggesting that traders were pricing the naira at substantially weaker levels. However, there was also an intra-day low of N1,519, indicating that some market participants were still hopeful for short-term interventions, possibly betting on future market adjustments.
Additionally, the Nigerian Foreign Exchange Market (NFEM) rate, which represents the average exchange rate, closed at N1,567. This is the weakest rate the naira has recorded this year and the lowest since December 2024, highlighting the pressures the currency has faced in recent months. Despite these challenges, the CBN’s continuous interventions and commitment to liquidity provision underscore its dedication to maintaining a stable FX market in the face of ongoing global and domestic challenges.
CBN injects $197.71m to stabilise FX market
