The value of the naira closed last week on a stronger note, appreciating by 1.1% at the official rate, to trade at N1,531 per dollar. This improvement came amid targeted interventions by the Central Bank of Nigeria (CBN) in the foreign exchange market.

At the parallel market, the naira also showed resilience, closing at N1,660 to the dollar, up from N1,665 at the start of the week. Throughout the week, the CBN sold $114.85 million to authorized dealers, helping to bolster the currency’s performance.

However, the naira faced some declines in the forwards market. The 1-month contracts saw a slight dip, closing at N1,591.41, reflecting a -0.1% depreciation. Similarly, the 3-month contracts fell by -0.8% to N1,667.93, while the 6-month and 1-year contracts experienced a decline of -1.6% and -1.4%, closing at N1,779.33 and N1,962.32 per dollar, respectively.

Despite these fluctuations, the CBN’s intervention did little to prevent a decrease in Nigeria’s external reserves. The 30-day moving average dropped by 0.75% or $303.95 million week-on-week, bringing the total reserves to $39.99 billion as of January 23, 2025, down from $40.29 billion on January 17, 2025.

Analysts from Cordros Research remain cautious but optimistic, predicting that foreign exchange demand pressures will persist in the short term. They believe that sustained CBN interventions and the enhanced transparency from the newly adopted Electronic Foreign Exchange Matching System (EFEMS) will provide a cushion for the naira’s stability.

Further regulatory measures are expected this week, with the CBN set to launch the Nigeria Foreign Exchange Code on Tuesday. This code will introduce a set of rules to guide market participants and improve efficiency. CBN Governor Olayemi Cardoso also announced plans to establish a compliance department by the end of February, aimed at addressing past challenges, aligning with global standards, and fostering a more transparent and resilient financial sector capable of driving Nigeria’s economic growth.