CBN Injects $81m into FX Market as Naira Faces Pressure, But Outlook Turns Positive
The Central Bank of Nigeria (CBN) injected $81 million into the Bureau De Change (BDC) segment of the foreign exchange (FX) market last week in a bid to ease mounting demand pressure on the naira. Despite this intervention, the naira still depreciated by 0.4% week-on-week to N1,538/$1 as demand continued to outstrip supply. The move highlights the apex bank’s commitment to supporting the FX market even as it contends with short-term volatility and economic uncertainty.
There were encouraging signs on the external reserve front, with Nigeria’s gross FX reserves climbing for the third consecutive week—rising by $778.34 million to $38.63 billion as of July 24, 2025. This boost in reserves has helped improve market sentiment and reflects stronger external inflows. Meanwhile, forward FX rates suggested growing investor confidence, with the naira appreciating across all contract tenors—from a 0.2% gain in the 1-month forward rate to a 0.3% uptick in the 1-year contract.
Analysts attributed the firmer forward rates to the CBN’s consistent interventions, improved FX liquidity, and increased foreign portfolio inflows. A Lagos-based fixed income analyst noted that rising reserves and attractive naira yields were reinforcing market stability. Cordros Research echoed this sentiment, forecasting continued naira stability backed by strong liquidity and steady domestic and foreign inflows—while urging cautious optimism amid ongoing reforms and macroeconomic adjustments.
In the domestic debt market, the Debt Management Office (DMO) is seeking to raise N100 billion via re-openings of the APR-2029 and JUN-2032 bonds. Investor interest is expected to be high, with speculation that robust demand and a potential shift in monetary policy could drive yields lower. Already, average bond yields have declined by 29 basis points to 16.3%, as institutional investors reinvest coupon payments. Yield drops were most notable across short-, mid-, and long-term segments, particularly in APR-2029 and APR-2032 bonds, signaling growing investor confidence in government debt instruments.
Source: The sun