Naira to maintain stability on CBN intervention

The naira is expected to maintain stability this week and beyond as the Central Bank of Nigeria (CBN) continues to intervene in the foreign exchange (FX) market.

The CBN had directed the Bureau De Change Operators (BDCs) to purchase $25,000 weekly from authorized dealers at Nigerian Foreign Exchange Market (NFEM) rates.

In a circular signed by W. J. Kanya, acting director of the trade and exchange department, the CBN stated that further to the previous circular, TED/FEM/FPC/001/030 dated December 19, 2024, which temporarily granted BDCs access to purchase foreign exchange from authorised dealers at the National Foreign Exchange Market (NFEM) rate, new guidelines are being implemented. These guidelines include a weekly purchase cap of $25,000 per BDC from authorised dealers.

On a monthly basis, the naira closed flat as the dollar was quoted at N1,500 on Friday, February 2025, the last trading day of the month compared to N1,499 quoted on February 3, 2025, the first trading day of the month, at the Nigerian Foreign Exchange Market (NFEM), according to data provided by the CBN.

At the parallel market, popularly called black market, the naira appreciated by N94 to N1,505 on Friday, February 28, 2025, marking a 6.2 percent over N1,599 per dollar exchanged at the beginning of the month, data from street traders and online data collating platform has revealed.

“In March, we anticipate the Naira will maintain its positive performance across FX segments, supported by the CBN’s continued dollar supply to Bureau De Change (BDCs) and Deposit Money Banks (DMBs), provided there are no adverse market shocks,” analysts at Afrinvest Securities Limited said.

Against other currencies, like European Euro, the naira lost N27.31 in one month as the currency closed at N1,552.93 per one Euro on the last trading day in February 2025, losing 1.8 percent from N1,525.62/Euro quoted at the beginning of last month, data from the CBN showed.

On a day-on-day trading, the naira strengthened against the Euro, gaining N70 as one Euro was quoted at N1,500 on Friday compared to N1,570 quoted on Thursday at the black market.

The naira depreciated against Pounds by N42.53 or 2.3 percent in one month at the official FX market. Pounds was quoted at N1,838.15 at the trading day of February 2025, as against N1,880.68 per Pounds quoted on Friday, 28, 2025, the last trading day of the month, the CBN data indicated.

At the black market, the naira appreciated against the Pounds by 2.6 percent day-on-day to N1,850 per pound on Friday 28, 2025 from N1,900/pounds on Thursday.

The Canadian dollar closed at N1,059 on Friday 28, 2025, the last trading day in February, the same rate it closed on the previous day in the black market.

Nigeria’s external reserves declined by $1.18 billion in February, losing 2.98 percent to $38.41 billion as of February 28, 2025 from $39.59 billion recorded at the beginning of the month, data from the CBN showed.

According to a report by Afrinvest, the decline can be linked to CBN’s efforts to stabilise the naira, particularly through the resumption of payments for the verified portion of the outstanding $7.0bn foreign exchange backlog. In the official market, the Naira faltered 1.7 percent m/m against the greenback to close at N1,500.15/$1.00. Conversely, the parallel market rate appreciated 8.5 percent to N1,490.0/$1.00, the report noted.