Dollar demand pressures naira despite CBN’s $250m intervention
By Aboki Forex —
The naira came under renewed pressure last week as strong dollar demand from importers and manufacturers overwhelmed the Central Bank of Nigeria’s (CBN) latest intervention. Market data showed that the CBN injected $250 million into the foreign exchange market, including an additional $80 million during the review week, but the supply was not enough to meet elevated demand.
CBN intervention fails to calm market
The CBN had stepped in with a $250 million injection in a bid to ease supply shortages across the forex market. An extra $80 million was also released within the same week. Despite these efforts, the dollar shortage persisted, and the exchange rate came under renewed pressure. Importers, manufacturers, and other market participants continued to chase dollars, pushing the naira lower.
Traders said the interventions were too small relative to the size of pent-up demand in the system. Many businesses are still struggling to access forex for raw materials and equipment, keeping demand elevated.
External reserves climb to $51.74 billion
Despite the weaker exchange rate, Nigeria’s external reserves continued their upward trajectory, providing a positive signal for the country’s external position. Gross external reserves rose by $217.75 million to $51.74 billion as of July 9. This marked the ninth consecutive week of growth, after reserves had increased by $170 million to $51.46 billion at the end of June.
The steady rise in reserves suggests that the CBN is still able to attract dollar inflows, even as it sells forex to defend the naira. Analysts say the reserve build-up could give the central bank more room to manage the exchange rate in the coming weeks.
What this means for the naira and businesses
The combination of rising reserves and persistent dollar demand leaves the naira in a tight spot. While the CBN’s intervention shows it is willing to defend the currency, the scale of demand means the pressure is unlikely to ease soon. For Nigerian businesses that rely on imported inputs, the weaker naira raises costs and squeezes margins. Consumers may also feel the pinch as imported goods become more expensive. The coming weeks will show whether the CBN can sustain its intervention pace without draining the reserves it has worked to build up.