Central Bank of Nigeria Injects $50 Million to Stabilize Naira in Forex Market
Abuja, May 27, 2025 – The Central Bank of Nigeria (CBN) intervened in the foreign exchange (FX) market on Tuesday by injecting $50 million to authorized dealer banks, aiming to boost liquidity and stabilize the naira amid renewed demand pressures. The sales were conducted within the exchange rate range of ₦1,581.92 to ₦1,585 per US dollar.
Context and Market Impact
This intervention follows a previous sale of $190 million last week, which had temporarily supported the naira. Despite these efforts, the naira slightly depreciated to ₦1,583.73 per dollar in the official Nigerian Foreign Exchange Market (NFEM), reversing a two-week rally driven by export inflows. In the parallel market, the naira traded at about ₦1,620 per dollar, as market participants anticipated the cessation of weekly FX sales to bureau de change (BDC) operators by the end of May 2025.
The CBN’s Monetary Policy Committee (MPC), in its May 19–20 meeting, retained the Monetary Policy Rate (MPR) at 27.5%, maintaining tight monetary conditions to control inflation and support currency stability. The Committee also upheld the Cash Reserve Ratio (CRR) at 50% for deposit money banks and 16% for merchant banks, measures that influence liquidity in the banking system.
Foreign Exchange Reserves and Global Factors
Nigeria’s gross external reserves increased by 2.85% to about $38.9 billion as of May 16, 2025, up from $37.82 billion at the end of March. This reserve build-up provides a buffer to support the naira amid external shocks.
Globally, the US Dollar Index fell below 99, its lowest level in over a month, pressured by uncertainties over US fiscal policy and trade directions. This global environment offers some relief to emerging market currencies like the naira.
Policy on Bureau de Change Operators
The CBN has extended the weekly $25,000 forex purchase window for BDC operators until May 30, 2025. This controlled access aims to improve liquidity at the retail end and reduce volatility in the parallel market. However, market watchers remain cautious about the long-term effectiveness of this policy amid persistent economic challenges.
Outlook
While the $50 million injection did not immediately reverse depreciation pressures, continued CBN interventions, combined with export inflows and prudent monetary policy, are expected to sustain relative naira stability. The central bank remains vigilant, monitoring global and domestic developments to adjust policies as needed.
